OCBC said to consider sale of stake in United Engineers again

The OCBC premises in Singapore.
The OCBC premises in Singapore. PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - OCBC and affiliates are again weighing the sale of their stake in United Engineers, a century-old Singapore property and construction company, according to people with knowledge of the matter.

OCBC, its insurance arm Great Eastern Holdings and the bank's founding Lee family are working with an adviser to start gauging interest, the people said, asking not to be identified as the deliberations are private. Exclusive talks between OCBC and Charoen Sirivadhanabhakdi, Thailand's richest person, lapsed last year after parties couldn't reach an agreement about the asset.

The Singapore firms and the Lee family own more than 30 per cent of United Engineers, the people said. Under Singapore rules, buying such a stake would trigger a mandatory takeover offer for United Engineers, which has a US$1.1 billion (S$1.49 billion) market value.

A sale of the stake would be welcome in the city state where dealmaking is in a slump this year, even as finance- related companies in Southeast Asia - including OCBC - continue to pursue deals. OCBC agreed in April to pay about US$320 million for Barclays' wealth and investment-management business in Asia, beating out Singapore rival DBS Group Holdings in the bidding.

Meanwhile, announced mergers and acquisitions involving Singapore companies total US$55 billion in the first nine months of the year, down 31 per cent from the US$80 billion during the same year-ago period, according to data compiled by Bloomberg.

Shares of United Engineers, founded in 1912, advanced 20 per cent in Singapore trading this year, while the benchmark Straits Times Index is down 1.2 per cent over the same period. OCBC and Great Eastern declined to comment, while a representative for United Engineers didn't immediately respond to an e-mail seeking comment.

United Engineers has been selling non-core businesses and assets in recent years, including stakes in property management companies in China, an Indonesian steel fabrication firm and a Singapore wireless broadband provider last year. It said in February it was selling a US subsidiary Multi-Fineline Electronix.