OCBC, the Wongs and SGX are winners

Great Eastern Holdings is set to resume trading following an EGM where 36% of shares of shareholders who voted in person or by proxy voted against delisting.

Great Eastern Holdings (GEH) is likely to make a return to our terminals as a listed stock. In a way, Oversea-Chinese Banking Corporation (OCBC), the Wong family that stubbornly held out against delisting, and the Singapore Exchange (SGX) are winners.

Singapore is a winner because Hong Kong is getting an insurance company IPO in FWD Group. Singapore will now have a listed insurer decades older than the ones listed in Hong Kong. More than that, GEH has the largest market share in Singapore and Malaysia. Based on a price of $25.60, GEH’s market capitalisation is $12.1 billion.

As part of OCBC’s undertaking to GEH, the bank will elect to receive Class C Non-Voting shares under GEH’s Bonus Issue. The 10% free float requirement will be restored assuming all GEH minority shareholders receive the bonus ordinary shares.

OCBC is a winner because it gained more GEH shares. The bank says in a statement: “OCBC announced at the launch of the voluntary general offer (VGO) on 10 May 2024 that we intended for the VGO to increase our investment in GEH beyond the 88.44% shareholding then. The objectives are to capture benefits from further operational synergies with GEH and a higher share of its value. These objectives have been met with the increase in OCBC’s investment in GEH to 93.72% in October 2024, successfully concluding the VGO.”

At any rate, OCBC had also said on June 23 that regardless of the outcome of the EGM, “we would be satisfied with this level of economic interest. Class C Non-Voting shares are entitled to dividends and other distributions, and will be earnings accretive to OCBC”. In that event, OCBC shareholders should also be happy. What OCBC shareholders want is earnings growth and dividends.

In the June 23 announcement, OCBC added that it is electing for the Class C Non-Voting shares at GEH’s request to help GEH to meet the Free Float requirement and the resumption of trading. The bank added that it has no intention to convert its Class C Non-Voting shares to ordinary shares on or after the fifth anniversary of the first issuance of the Class C Non-Voting shares as it will result in GEH losing its free float again.

OCBC had already stated in its announcement on June 6 that its exit offer is final and it has no intention to launch another offer in the foreseeable future.

“As OCBC’s insurance arm, GEH is pivotal to our ambition to be a leading wealth management player in the region. Over the years, as we increased our stake, we tightened integration and increased synergies with GEH. This has enabled us to deliver an even more comprehensive and innovative suite of investment, insurance, and estate planning solutions to customers. GEH has likewise benefited from expanded access to our retail and commercial customer base. OCBC will continue to accelerate the synergistic work with GEH as we grow as one integrated financial services group,” the bank adds.