Singapore – OCBC has announced that it is offering a S$1.4 billion voluntary unconditional general offer for the 11.56% stake in Great Eastern that it does not currently own. For the bank, this move is aimed at strengthening OCBC’s business pillars of banking, wealth management and insurance, and optimising its capital to enhance shareholder returns.
With the Offer, OCBC intends to increase its investment in Great Eastern beyond its current stake of 88.44%, with a view to delisting the insurer from the SGX-ST.
OCBC’s corporate strategy gained strong momentum in 2023, leveraging OCBC’s strengths to capitalise on the vast opportunities in one of the world’s fastest-growing regions. The offer is therefore in line with OCBC’s strategy to solidify its wealth management leadership position to drive growth by capturing rising Asian wealth.
Helen Wong, chief executive officer at OCBC Group, said, “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.”
The offer is expected to be earnings accretive to OCBC. Great Eastern provides diversification to OCBC’s earnings base to deliver balanced earnings growth through economic cycles. Great Eastern has contributed an average of about S$700m annually in net profit to OCBC over the past 10 years, which translates to an average of about 15% of OCBC’s annual net profit over this period.
Wong added, “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.”
