Great Eastern's Delisting Crossroads: Cash Out or Face the Unlisted Abyss?

The delisting proposal for Great Eastern Life by its parent, OCBC, has thrust minority shareholders into a high-stakes decision: accept a S$30.15 cash offer—a 17.8% premium over its prior bid—or risk holding shares in an unlisted entity with no liquidity. Meanwhile, if the delisting fails, shareholders face dilution via a 1-for-1 bonus issue that could erode their voting power while leaving OCBC's economic grip intact. This is a pivotal moment for investors, as the outcome will reshape Great Eastern's corporate structure and the broader ambitions of Singapore's largest banking group.

The Fairness Debate: Is S$30.15 a Fair Price?

The 17.8% premium over OCBC's May 2024 bid of S$25.60 appears generous at first glance. The independent adviser Ernst & Young (EY) has labeled the offer “fair and reasonable,” citing metrics such as a price-to-embedded value (P/EV) of 0.8x, price-to-net asset value (P/NAV) of 1.6x, and a price-to-earnings (P/E) ratio of 14.3x. These ratios are framed as premiums relative to hypothetical peer averages, though the provided data lacks broader insurer sector metrics.

However, skepticism remains. The P/EV of 0.8x suggests the shares trade below their embedded value, which typically reflects the present value of future cash flows. A sub-1x P/EV could indicate undervaluation—or that Great Eastern's growth prospects are dimming. Meanwhile, the P/NAV of 1.6x, while reasonable for an insurer, is not decisively above peer averages without comparative data. Shareholders must ask: Is this a fair price, or a last bid to lock in control before valuation risks crystallize?

The Risks of Remaining Unlisted

If the delisting passes, non-accepting shareholders will retain shares in a private entity. This carries profound risks:
1. No Liquidity: Unlisted shares cannot be traded on public markets, locking capital in an asset with no secondary buyers.
2. No Transparency: Access to financial disclosures may diminish, making it hard to assess performance.
3. OCBC's Dominance: With 93.72% economic interest post-delisting, OCBC could prioritize its strategic goals over minority returns.

The alternative—rejecting delisting—forces a 1-for-1 bonus issue, which restores Great Eastern's free float but at a cost. Minority shareholders will receive voting shares, but OCBC will convert its stake to non-voting Class C shares, reducing its voting stake to 88.19%. This dilution weakens minority influence while allowing OCBC to retain economic control.

The 75% Threshold: A Strategic Pivot Point

The proposal's success hinges on securing 75% of minority votes—a steep hurdle. OCBC has no voting rights on the delisting itself but will support the bonus issue if needed. This creates a paradox:
- If delisting fails, Great Eastern remains listed, but the bonus issue dilutes voting power and may depress share prices due to increased supply.
- If delisting succeeds, shareholders who reject the offer face the unlisted abyss.

The 14-day acceptance period after EGM approval tightens the timeline, adding urgency. For holders, the calculus is stark: accept the premium now or risk permanent illiquidity.

Why OCBC Wants This Done

OCBC's vision of an integrated financial services powerhouse drives this push. Full control of Great Eastern would streamline operations, reduce governance friction, and allow cross-selling of banking and insurance products. The proposed structure—maintaining 93.72% economic interest even with diluted voting—ensures OCBC's strategic goals remain intact. Minority shareholders, however, are collateral in this play.

Investment Advice: Act Before the Clock Runs Out

1. Take the Cash: The 17.8% premium offers immediate liquidity and avoids the unlisted trap. While some may argue for holding for potential upside, the risks of illiquidity and diminished influence outweigh the speculative reward.
2. Reject Delisting Only if Confident in Long-Term Value: If you believe Great Eastern's earnings or NAV will rise post-dilution, and the bonus issue doesn't crater the share price, holding voting shares could be viable. But this requires faith in a market that already deemed the stock too low to maintain a 10% free float.

The 75% threshold creates a self-fulfilling prophecy: if major institutional holders or large retail blocks push for delisting, smaller shareholders may be forced along. Conversely, a "no" vote could trigger a free-float dilution spiral.

Final Verdict

This is not just a vote on a premium—it's a referendum on liquidity, control, and the future of minority shareholder rights in Singapore's financial sector. With the SGX's June 8 deadline looming, the clock is ticking. Minority holders should act decisively: cash out at S$30.15 or risk being left in the dark.

The path forward is clear. The question is whether shareholders will seize it.