OCBC makes S$1.4 billion offer to acquire full stake in Great Eastern

OCBC makes S$1.4 billion offer to acquire full stake in Great Eastern | Insurance Business Asia

Insurance News

OCBC makes S$1.4 billion offer to acquire full stake in Great Eastern

Move aligns with group’s strategy to strengthen business pillars

Insurance News

By
Roxanne Libatique

Oversea-Chinese Banking Corporation Limited (OCBC) has announced a S$1.4 billion offer to acquire the remaining 11.56% of Great Eastern Holdings Limited that it does not already own.

This move aims to strengthen OCBC’s core pillars in insurance, banking, and wealth management while improving its capital management to boost shareholder returns.

OCBC’s interest in purchasing remaining stake in Great Eastern

The offer, which aligns with OCBC’s corporate strategy to solidify its position in wealth management, values Great Eastern shares at S$25.60 each. This represents a 36.9% premium over Great Eastern’s last traded price of S$18.70, with additional premiums ranging from 38.6% to 42.4% over various historical trading periods up to May 9, 2024.

The bank currently holds 88.44% of Great Eastern, and this offer seeks to secure complete ownership and eventually delist the insurer from the Singapore Exchange.

OCBC Group CEO Helen Wong characterised the move as a logical step in the bank’s broader strategic plan.

“The offer is a natural progression of OCBC’s strategy. We have moved intentionally to build up a strong wealth management franchise by hiring the best people and instituting best practices and processes, and raising our investment in Great Eastern. We have been looking at opportunities to best use our capital and believe the offer allows us to deploy our resources into a key business that is expected to be earnings accretive to OCBC,” she said.

OCBC’s strategy to strengthen position in wealth management

OCBC introduced its current corporate strategy in 2022, emphasising regional trade, investment, and wealth flows.

The offer will aid the bank in strengthening its leadership in wealth management through hubs in Singapore, Hong Kong, and Dubai.

Over the last 10 years, Great Eastern has contributed an average of S$700 million annually to OCBC’s profits, comprising approximately 15% of the bank’s net profit.

Wong added that increasing the stake in Great Eastern will allow OCBC to better leverage the synergies between the two firms.

“This is not the first time that we are making an offer to increase our investment in Great Eastern – first in 2004, followed by 2006. As OCBC has been the majority shareholder of Great Eastern for the past 20 years, the group has entrenched institutional knowledge and expertise to manage the insurance business. We are confident this exercise complements our One Group, One Brand strategy. This will further accelerate our ambitious wealth management plans and build even tighter bonds and synergies across all our business pillars and key markets,” she said.

J.P. Morgan Securities Asia Private Limited is the exclusive financial adviser for the offer, while Allen & Gledhill LLP provides legal advice.