British activist investor Palliser seeks to disrupt ‘unfair’ Great Eastern takeover

SINGAPORE - Any privatisation deal must be fair and reasonable, said the Securities Investors Association (Singapore), or Sias, after British activist investor Palliser Capital protested against insurer Great Eastern’s proposed takeover by OCBC Bank.

The investor is looking to disrupt the takeover of Great Eastern (GE), the Financial Times (FT) reported on Jan 15.

Palliser, which is a fund manager based in Britain, called the deal “gravely unfair” for shareholders, and appealed to the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) to intervene in the matter, FT said, citing documents it saw.

Palliser also reportedly complained to MAS about the insurer’s refusal to meet the activist investor over the issue, FT added.

The investor has been involved in several instances of shareholder activism in 2024, such as calling for Japanese property player Tokyo Tatemono to sell off some holdings and enhance its corporate governance in October 2024.

Mr David Gerald, Sias president and chief executive, told The Straits Times that Palliser has involved itself probably because it recognises “significant value in GE and has confidence in Singapore’s regulatory framework, which protects minority investors from unfair privatisation offers”.

“It is encouraging to see an international fund investing in Singapore and engaging in responsible shareholder activism, which could perhaps invigorate the local market,” he said.

OCBC made a $1.4 billion bid on May 10, 2024, to take GE private following shareholder unhappiness over falling returns.

More than a month later, OCBC said on June 27 that its offer price of $25.60 a share in the bid to take GE private represents a “meaningful premium” for shareholders.

That same month, independent financial adviser EY Corporate Finance labelled the offer “not fair but reasonable”. It said then that the offer price was lower than the derived range of values for the shares, which it determined to be from around $28.87 to $36.19 per share.

But EY still advised the independent directors to recommend that shareholders accept the offer, after considering various factors such as the fact that there was little likelihood of competing offers.

Mr Gerald said: “Sias questioned the GE board on GE’s performance and the gaps in alignment of interest between management and shareholders.

“When OCBC made an offer for GE, Sias highlighted that GE’s embedded value was significantly higher at $36.59 per share as at the 2023 financial year and that GE continued to perform strongly, as seen in its results in the first quarter of 2024.”

He added that when the offer was deemed not fair but reasonable, Sias wrote to the board to seek clarity on its decision to proceed with the offer.

“Sias also highlighted that GE would not be allowed to delist given that the offer was ‘not fair’,” he said.

“While Sias is not a financial adviser and does not explicitly make recommendations to shareholders, we amplify the voices of minority shareholders, helping to level the playing field so that minority shareholders can make their own informed decisions.”

In a letter seen by FT, Palliser reportedly said that GE’s board was “highly complacent” in recommending the offer, and added that the insurer’s “corporate governance safeguards designed to protect the interest of minority shareholders were lacking or insufficiently robust”.

When contacted by ST, SGX, OCBC and GE declined to comment.

But ST understands that the SGX is engaging with GE on the matter.

ST has also reached out to MAS and Palliser for comment.

GE now has until Jan 24 to explore options to comply with free float requirements under SGX’s listing rules, after the proportion of shares in the hands of the public dropped to less than 10 per cent following OCBC’s voluntary unconditional general offer in May 2024.

Correction note: This story was edited for clarity.