This article first appeared in The Edge Malaysia Weekly on April 14, 2025 - April 20, 2025
THE shareholding spread of Singapore-listed Great Eastern Holdings Ltd, in which Bursa Malaysia-listed Sungei Bagan Rubber Co (M) Bhd (KL:SBAGAN) holds a small block, was the focal point of shareholders at the insurer’s annual general meeting (AGM) in Singapore last week.
The board was asked if measures are being taken to resolve the lack of the 10% public shareholding spread needed to comply with Singapore Exchange (SGX) listing rules, including the possibility of getting Great Eastern’s largest shareholder Oversea-Chinese Banking Corp Ltd (OCBC) to make an exit offer to the remaining minorities of Great Eastern who did not accept an earlier offer.
A question also touched on whether these minority shareholders could choose to hold on to the Great Eastern shares, even if an exit offer is made, or enter into any private negotiations with OCBC, according to a disclosure by Great Eastern to SGX on deliberations at the AGM. (SGX rules require such disclosures to be made.)
The board replied that the company was not in a position to advise any particular shareholder in respect of his or her taking any particular course of action. It also said that Great Eastern was working with a financial adviser to explore possible options for the company to move forward. It did not elaborate what the options were.
Two weeks ago, Great Eastern appointed Merrill Lynch (Singapore) Pte Ltd (better known as BofA Securities) as the financial adviser to explore options available to resolve the shareholding spread.
“The company will issue announcements to update shareholders if there are any material developments,” according to an announcement to SGX by Great Eastern on its responses to shareholders at the AGM.
In May last year, OCBC made an offer of S$25.60 per share for the rest of the shares in Great Eastern that it did not own in a bid to take the insurer private. OCBC, which already had an 88.44% stake in Great Eastern at the point of making the offer, ended up with 93.7% at the end of the offer.
The acceptance level was insufficient for OCBC to take Great Eastern private or to invoke the compulsory acquisition clause to acquire the remaining shares, which amounted to just above 6% of the company. Those who held out felt that the offer was too low considering that the independent valuation report valued Great Eastern at S$28.87 to S$36.17 per share.
The latest Great Eastern annual report shows that SBagan and The Nyalas Rubber Estates Ltd, which have a common shareholder in Lee Thor Seng, collectively hold about 1.9% of the 6% that did not accept the offer. The Wong brothers, Hong Sun and Hong Yen, collectively hold 1.12% while the rest are held by about 10 shareholders, including a fund, Palliser Capital Master Fund Ltd.
In January this year, Palliser Capital, a British-based activist fund, was reported to have appealed to the Singapore authorities to intervene in order to get a higher offer. It is not clear what the basis would have to be for such an intervention to take place beyond the argument that the offer was not fair. The fund did say it was disappointed that the Great Eastern board recommended that shareholders accept the OCBC offer.
Thor Seng is a member of the Lee family who co-founded OCBC, while the grandfather of the Wong brothers, Wong Seng Qui, was the chairman of Great Eastern Life Assurance Co from 1951 to 1969. Thor Seng and the Wongs are part of Singapore’s old money clan. Together, Thor Seng and the Wongs own slightly more than 3% of the outstanding 6.3% in Great Eastern.
“Based on OCBC’s failed privatisation last year, it is unlikely that the banking group would pare down its stake via a placement to rectify the shareholding. OCBC has been trying to take Great Eastern private since 2004 and will not reduce its stake,” says an investment banker. “The other option available is to undertake a corporate exercise to take out the remaining shareholders by offering them a higher price.”
There is no indication that OCBC will do it nor does it really need to do it.
At Great Eastern’s AGM, shareholders suggested to the board that any unilateral move (by the insurer) to address the shareholding spread was moot considering OCBC’s 93.7% stake and its irrevocable intention to delist Great Eastern.
“It would only prolong the agony of the minorities mired in this suspended state,” said a shareholder.
In response, the board stated that it was working with the financial adviser to assess the options and was mindful of the extension of time granted by the exchange to fulfil the shareholding spread.
SGX has given Great Eastern an extension of time until May 25 this year to fulfil its shareholding spread. If an extension is not given, the remaining minorites will end up in an unenviable position of holding 6.3% of an unlisted company.
SBagan has 4.8 million shares in Great Eastern. Based on Great Eastern’s last share price of S$25.80 per share, the value of its stake in the insurer is RM406 million, which translates to cash per share of RM4.36.
SBagan, which is controlled by Kluang Rubber Co (M) Bhd (KL:KLUANG), is currently trading at RM5.48.
Thor Seng of Nyalas Rubber has a majority stake in Kluang and holds 46% in SBagan through direct and indirect stakes.
If OCBC comes back with a revised price for Great Eastern, Thor Seng stands to get a bounty considering that he holds 4.04 million shares in the insurer directly through Nyalas Rubber and 4.77 million shares via SBagan. The question is will it?
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