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Will Great Eastern Holding Limited be Privatised Soon?

Oversea-Chinese Bank Corporation Limited (SGX: O39) has been upping its stake in its life assurance subsidiary, Great Eastern Holding Limited (SGX: G07).

At the end of February this year, OCBC had a 87.6% stake in Great Eastern Holding. This figure has since moved up to 87.75% by 27 July 2016. The change does not seem like much, but it puts OCBC closer to the 90% mark when the bank will have to make an offer to privatise the insurance unit.

Questions, questions, questions

The question cropped up during OCBC’s latest earnings briefing on 28 July 2016. Chief Executive Officer (CEO) Samuel Tsien was on hand to provide his take.

We have always liked the Great Eastern franchise.”

“And we believe that the synergy value that can be created between OCBC Bank and a majority owned subsidiary, Great Eastern will be more than that in the long term to derive value both for the shareholders and our customers.”

Here, Tsien felt that OCBC and Great Eastern had strengths that played off each other. With these benefits in mind, Tsien said:

“So, whenever there is an opportunity to increase our shareholding in Great Eastern at the market price, we would be willing to look at it.”

“And, I think there were a few incidents over the past six months of which we were offered those opportunities to acquire additional interest in Great Eastern of which we are please to take them.”  

OCBC’s recent transactions include acquiring 100,000 shares at S$21.45 per share reported on 27 July 2016 and 611,800 shares at S$20.59 per share as reported on 1 July 2016.

To be sure, Tsien wasn’t going to say whether Great Eastern Holding will be privatised during the briefing. We will have to continue watching future developments.   

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.