OCBC to divest properties for expansion of business banking interest

Jose Castro – Fourth Estate Cooperative Contributor

Singapore, Singapore (4E) – The Oversea-Chinese Banking Corp is now in discussion as to the sale of its interests in United Engineers Ltd. United Engineers, or UEM is a Singaporean firm that specializes in construction and property management. The buyer of the said interest is billionaire Charoen Sirivadhanabhakdi of Thailand.

According to sources who requested anonymity, OCBC together with its insurance unit owns 34.1% of UEM. In order to avoid the application of the 30% mandatory takeover offer rule under Singaporean law, OCBC had sent out feelers for the possible divestment at the right price. This, together with the recent purchase by OCBC of Wing Hang Bank Ltd, would help modify the current balance sheet of the company.

Aside from the 34.1% shareholdings, OCBC also owns 69% of the preferred shares in UEM according to its annual report.

The discussions are still in its infancy but initial repercussions include a jump of nearly 8% in stock price for UEM. This increase is about SGD0.18, which prompted the Singapore Exchange to conduct an initial inquiry as to the ‘unusual price movements’ registered. The stock was priced at SGD2.46 prior to the suspension, as its trading volume more than five times its daily average in the past six months.

Despite the doldrums in both the Singaporean and Chinese markets, UEM had posted higher than average revenues. In its latest filing, its net profits jumped 165% for the second quarter ending June 30. It earned USD40.8 million making overall revenues reach USD1.22 billion overall.

The purchaser, TCC Land Co. of Bangkok, is owned by Thailand’s richest man. Charoen, as he is affectionately called, has amassed a fortune estimated by Bloomberg’s Billionaires Index at USD12.7 billion. He has a conglomerate with interests in food, technology, banking and property development.

TCC Land Co. CEO Soammaphat Traisorat did not return calls or respond to emails seeking comment on the said transaction. OCBC similarly did not respond to inquiries about the matter.

United Engineers itself is also undertaking major changes in its property portfolio. It had agreed to sell off its MFS Technology business earlier in the month. The price tag for that divestment was at SGD124 million. Another business unit, its luxury car dealership, was also being discussed as to be items of another divestment transaction. Last year, the company purchased WBL Corp for USD725 million, which included debt and other properties.

The engineering firm was established back in 1912. It was one of the major firms that assisted in the construction of the iconic Shangri-La Hotel in Singapore as well as its Supreme Court building. Part of UEM’s property portfolio is the UE Square shopping mall located in Singapore CBD.

There are also business interests in projects in five cities in mainland China. Amongst its most attractive property developments is the Austville Residences, which had just received its Temporary Occupation Permit in this quarter. Another development would be Eight Riversuites, which had tremendously helped increase to the group’s overall revenue.

The said purchase would still be subject to regulatory approval.

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