Aug 22, 2014

    OCBC to sell UE stake to Thai tycoon

    OCBC Bank is in talks to sell its stake in United Engineers, a Singapore property and construction company, to Thai billionaire Charoen Sirivadhanabhakdi, people familiar with the matter said.

    The discussions are at an early stage, said one of the people, who asked not to be identified as the deliberations are private.

    OCBC, its insurance unit and the bank's founding Lee family together own 34.1 per cent of United Engineers, according to a filing in August last year. Buying more than a 30 per cent stake would trigger a mandatory takeover offer for United Engineers under Singapore rules.

    United Engineers shares were halted from trading yesterday after they jumped the most in more than four years, prompting Singapore's stock exchange to ask the company to explain the move. The stock was up 7.4 per cent to $2.46 before the suspension, with trading volume of more than five times the six-month daily average.

    Selling the stake would help OCBC, South-east Asia's second-largest lender, bolster capital after its $5 billion takeover of Hong Kong's Wing Hang Bank this year. Companies backed by Mr Charoen have announced US$4.5 billion (S$5.6 billion) of acquisitions this year.

    In 2012, OCBC entered talks to sell its holdings in Fraser & Neave and Asia Pacific Breweries to Mr Charoen's Thai Beverage. That touched off a three-front bidding war for the two companies, with Heineken eventually buying Asia Pacific Breweries and Mr Charoen beating out OUE for Fraser & Neave in deals that totalled US$15 billion.

    OUE had earlier expressed interest in OCBC's stake in United Engineers, though those talks are no longer active, said one of the people. OCBC and its units also control 69 per cent of the company's preference shares, according to United Engineers' latest annual report.

    Before yesterday, United Engineers had advanced 29 per cent in trading this year, giving the company a market value of $1.5 billion as of Wednesday's close.

    Mr Charoen is Thailand's richest man with a US$12.7 billion fortune, according to the Bloomberg Billionaires Index. He controls an empire whose businesses span industries from beer to property development.

    United Engineers, which bought Singapore-based builder WBL Corp last year for US$725 million including debt, was founded in 1912 as an engineering company that helped build Singapore's Shangri-La hotel and the historic Supreme Court.

    The company last week said second-quarter profit doubled as it booked income from recently completed residential properties. United Engineers' properties includes the UE Square shopping mall, and it owns real estate projects in five Chinese cities through WBL, according to the companies' websites.