Tag Archives: Minority oppression

Court case offers insights for valuation proceedings

In a court case involving two chemical manufacturers in their ownership of a shared venture, the judgment’s preference for certain valuation methods sets a precedent for future valuation experts to follow.


In DyStar Global Holdings (Singapore) Pte Ltd v Kiri Industries and others and another suit [2018] 5 SLR 1 (the “Main Judgment”), the SICC ruled that Senda International Capital Ltd (“Senda”) purchase Kiri Industries LTD’s (“Kiri”) shares in their shared venture, DyStar Global Holdings (Singapore) Pte Ltd. The SICC held that Senda has engaged in instances of oppressive conduct against Kiri. Kiri’s shares were valued as of 3 July 2018 (“the valuation date”).

In Kiri Industries Ltd v Senda International Capital Ltd and another [2019] 4 SLR 1 (the “12 March 2019 Judgment”), the court ruled that no minority discount for lack of control (“DLOC”) should be applied to the valuation of Kiri’s shareholding of DyStar.

The most recent proceeding involved the valuation of DyStar and Kiri’s shares in DyStar (“the valuation proceedings”).  Senda and Kiri engaged separate valuation experts to assist in the valuation process.

The experts utilized different approaches to valuation and arrived at different valuations. This divergence was a result of not only the different methodology applied, but also the significance they appointed to particular events. These include a category of occurrences known in the judicial proceedings as “Five Risk Events, and one-off events and transactions affecting DyStar’s valuation.

Judgment and learning points

The methodology used and valuation proposed by the expert appointed by Kiri was preferred to Senda’s. Reviewing their merits proves useful for other valuation experts. 

The valuation date is very important

Only events that occurred before the valuation date and, more interestingly, events occurring after the valuation date that were foreseeable as of the valuation date were to be taken in the valuation proceedings. For instance, an insurance pay-out in May and June 2019 had to be incorporated into DyStar’s valuation as they were foreseeable as at the valuation date.

Interestingly, the closure of a DyStar plant in Ankleshwar, India due to a notice by the state pollution control board before the valuation date did not affect the valuation. This is because it was judged that there was a subsequent notice issued after the valuation date. Hence, as the entirety of notices was not foreseeable before the valuation date, the closure was not included.

Reliance on market data is preferable

Kiri’s valuation experts relied on market data in the form of independent market and broker reports comparable to similar companies in terms of operation, revenue and market share.  This approach was praised by the judges as Senda failed to disclose some of DyStar’s key financial documents for the relevant years. 

They also relied on data from credible, peer-reviewed, and reputable sources, some of which were also used by Senda.

In addition to the valuation produced from the market approach, the expert also presented an alternative figure using the Discounted Cash Flow (DCF) method. Then, these values were aggregated into a single final valuation. This approach was praised for its commitment to accuracy.

Discounts and risk premium should be considered

A discount for the lack of marketability (DLOM) was applied to Kiri’s minority share as a reflection of the lack of marketability. This was the case as the company was privately-owned and not publicly-listed.

Also, a country risk premium was imposed on DyStar as it did business in multiple jurisdictions. This reflects the country-specific risks that come with such a vast multi-state operation.

All in all, the judgment sided Kiri’s valuation expert’s method and the sum of US$1,636m, but ruled that this required some minor technical calculations

About GAO Advisors

The insights provided in this case have been a feature of GAO’s valuation process.

GAO Advisors is a corporate financial advisory firm that provides strategy advice, transaction structuring, and valuation services.

It has acted as an Expert Valuation Witness to several seminal cases including  UTJ v UTK [2019] SGHCF 6, where it produced credible, fair and comprehensive assessments of the matters dealt with in its valuation reports. GAO provided an aggregated value from an amalgamation of two different methods for the asset valuation process. These valuation reports allowed the Court to arrive at a more just and equitable means of dividing matrimonial assets between the Parties.

Other cases include:

  • Valuation of a family textiles business in which patriarchs were seeking to claw-back over $10 million in fraudulent withdrawals by next-generation family members.
  • Valuation of damages in a High Court case where over 125 club members, in one of the largest representative action suits in Singapore, acted against the club owner for breach of contract and the torts of deceit and negligence.