OCBC Bank has increased its stake in Great Eastern Holdings to 93.52% following the close of its general offer on 12 July.
Under SGX rules, listed companies must maintain a free float—the percentage of shares owned by the public—of at least 10%. As OCBC’s increased ownership has reduced the free float to below the 10% threshold, Great Eastern’s shares will be suspended from 9am on 15 July 2024.
OCBC’s 93.52% stake is below the 98.87% required for a compulsory acquisition of the remaining shares. It also does not meet the 97.17% level at which SGX RegCo might direct Great Eastern to delist.
However, in its offer document, OCBC stated that it would not take any steps to maintain the listing status of Great Eastern if the free float requirement is not met and trading is suspended.
In a statement, Great Eastern said its insurance business and operations remain unaffected by the closing of the offer.
Group Chief Executive Officer Khor Hock Seng commented, “I would like to assure all our policyholders that their insurance policies with us remain unaffected and they will continue to receive the same high standards of service from Great Eastern and our financial representatives.”
“Our financial strength remains solid as before, and arguably stronger based on the increased market value of our shares following the announcement of the Offer,” he added.
The general offer was originally announced on 10 May 2024, with OCBC proposing to buy the remaining 11.56% stake in Great Eastern for S$1.4bn (US$1.03bn).
The offer, which was priced at the equivalent of S$25.60 per share, represented a 36.9% premium over Great Eastern’s last traded price of S$18.70 before the announcement. However, the Offer was noted to be at a 30% discount to Great Eastern’s embedded value per share of S$36.59 as of 31 Dec 2023.
Shareholders who did not accept OCBC’s offer can require the bank to buy them out at the offer price within three months under the Companies Act.
Great Eastern is one of four businesses named by the Monetary Authority of Singapore as domestic systemically important insurers (D-SIIs) as it is deemed to have a significant impact on the domestic financial system and economy in Singapore.
This ubcrease in shareholdings is part of OCBC’s strategy to tap into the growing demand for wealth management and insurance products in the region and to enhance shareholder returns. Great Eastern has been a significant contributor to OCBC’s profits, adding an average of about S$700m annually to the bank’s net profit over the past decade.
OCBC’s attempt to increase its stake in Great Eastern follows previous privatisation efforts in 2004 and 2006.
