On 19 June 2023, OCBC increased its stake in Great Eastern (GE) to 88.4%. The venerable bank tried to privatise Great Eastern Holdings (GEH) unsuccessfully in 2004 and 2006. In the 2006 attempt, OCBC Bank managed to raised its stake in Great Eastern to 87.1%. Since then, OCBC Bank has steadily increased its stake to 87.91% as at 31 March 2021. If a privatisation does materialise, what would be the implication on OCBC share price?
Under SGX Rule 723 of the Listing Manual, listed companies must ensure that at least 10% of their issued shares must be held by the public. As OCBC currently holds about 88.4% of Great Eastern, the bank would just need to acquire only 1.6% more of Great Eastern shares in order to trigger the mandatory delisting requirement.
As at 20 June 2023, OCBC share price was trading at $12.56, remaining flat after the Great Eastern stake increase. The fact that the counter did not move at all could mean that the market viewed a potential privatization of Great Eastern as “non-event” for OCBC share price. However, what if OCBC privatize the insurance and then sell it off to unlock value for OCBC shareholders?
An SG Wealth Builder member had raised the possibility of OCBC divesting Great Eastern to me lately.Read more