Investor Activism Heats Up at United Overseas Insurance

A brewing shareholder battle at United Overseas Insurance (UOI) has the potential to shift the focus to Haw Par Corporation, a company deeply intertwined with the UOB Group. Minority investors, led by former remisier Ong Chin Woo, are pushing for UOI to distribute its 4.3 million Haw Par shares to shareholders, arguing that the move would unlock significant value.

Ong has also proposed that UOI appoint a financial adviser to evaluate strategic options to maximize shareholder returns. The insurer, in response, acknowledged the resolutions on March 3 and stated that it welcomes constructive input from shareholders, with CEO Andrew Lim urging participation at the upcoming AGM in April.

Why UOI’s Haw Par Holdings Matter

Ong’s case is built on UOI’s exceptionally high capital ratios, which far exceed industry norms:

Shareholders’ funds to total assets stood at 70.4% (compared to the sector average of 33.5%).

Capital adequacy ratio was 415%, significantly higher than the sector’s 338%.

UOI’s Haw Par stake accounts for 27.7% of its total equity investments.

This concentrated holding is no coincidence—UOB, which owns 58.4% of UOI, is itself a major holder of 17.4 million Haw Par shares. In total, the UOB group controls 21.7 million Haw Par shares, representing a 9.8% stake in the company.

Haw Par’s Strategic Value: More Than Just Tiger Balm

While Haw Par is best known for its Tiger Balm brand, its real value lies in its major holdings of UOB and UOL shares:

74.9 million UOB shares
72 million UOL shares

Combined value: S$3.3 billion, which is 16% higher than Haw Par’s own market capitalization of S$2.8 billion.
Adding to its financial strength, Haw Par holds S$745.8 million in cash, with minimal borrowings of just S$36.3 million. Despite these assets, its stock remains undervalued, trading at S$12.69 per share—32.2% below its net asset value (S$18.74 per share).

A Potential Takeover on the Horizon?

The situation at UOI is reminiscent of what happened at Great Eastern Holdings. When Ong pushed for similar shareholder-friendly resolutions at Great Eastern, its parent company OCBC did not table them at the AGM. However, just two weeks later, OCBC made an offer to acquire the rest of Great Eastern at a 36.9% premium.

With UOI currently trading at S$7.42, a 3.1% discount to its NAV of S$7.66, speculation is growing that a similar scenario could unfold. UOB, which already holds a controlling stake in UOI, might make an offer to minority investors at a premium price rather than cede control of its Haw Par stake.

Will Haw Par Be Next?

With Haw Par’s undervaluation and its massive holdings in UOB and UOL, activist investors may soon shift their attention there. The estate of the late Wee Cho Yaw, which controls 36.5% of Haw Par, could be pressured to unlock shareholder value through dividends or a strategic buyout.

In the meantime, UOI’s AGM next month will be a key event to watch as minority investors push for a bigger share of the wealth hidden within Haw Par’s strategic assets.

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