Some shareholders point to the offer price’s 30% discount against the insurer’s embedded value.
OCBC Bank, which holds more than 88 per cent of Great Eastern, said earlier in May it is seeking to delist the stock.The price of $25.60 per share is well above the stock’s price before the announcement. Some shareholders, however, point to a 30 per cent discount against Great Eastern’s embedded value, a metric that has been used to value insurance firms elsewhere. By that measure, it is half the valuation the bank used in its last attempt to take full ownership of the company.
Since 2021, he has been a vocal spokesman for a group that now comprises more than 100 minority shareholders. “If OCBC has no other choices, at least give us a fair exit offer,” he added. The bank has steadily built its 88.44 per cent stake in the 116-year-old insurer, which operates in Singapore, Malaysia and Indonesia. Over the past 10 years, Great Eastern has contributed an average of about $700 million a year in net income to OCBC, equivalent to about 15 per cent of OCBC’s annual profit, according to the bank.
Great Eastern told investors in April that it has taken steps to strengthen capital management and improve dividend payouts but that many of the factors that affect share prices are beyond its control. “There are risks that OCBC might have to make a higher offer in order to narrow that discount gap,” he added.
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