Photographer: Darren Soh/Bloomberg

United Engineers Said to Seek Bids for Century-Old Company

Updated on
  • Company sends preliminary information to potential suitors
  • First-round bids for United Engineers due by end of month

United Engineers Ltd.’s largest shareholders have started formally assessing buyer interest in the century-old Singapore property group, according to people with knowledge of the matter.

The major shareholders of the company, which has a market value of S$1.7 billion ($1.2 billion), have been sending preliminary financial information on United Engineers’s business to potential bidders since the end of December, the people said. At least 10 parties including regional property developers, private equity firms and real estate funds have indicated interest, the people said, asking not to be identified because the information is private. 

First-round bids are due by the end of this month, according to the people. Shares of United Engineers rose as much as 4.3 percent Thursday in Singapore, the biggest intraday gain in nearly three weeks, before trading was halted. United Engineers’s biggest owners, Singapore lender Oversea-Chinese Banking Corp. and its insurance unit Great Eastern Holdings Ltd., said in September they were reviewing strategic options for their combined stakes in the company. 

“Investors looking to buy these assets would be looking at it as a play on yields,” said Nicholas Mak, an executive director at SLP International Property Consultants in Singapore. “A yield of at least five percent on the assets would make them attractive.”

United Engineers has been selling non-core assets in recent years, including stakes in property management companies in China, a Singapore luxury car distributor and an Indonesian steel fabrication business. Its current property portfolio includes Singapore shopping centers like Rochester Mall and Seletar Mall and mixed-use developments such as UE BizHub City, as well as condominiums, hotels and serviced apartments, according to its website.

“The reported keen bidding for this portfolio is not surprising,” Priyaranjan Kumar, regional executive director of capital markets at Cushman & Wakefield Inc. in Singapore, said by e-mail Thursday. “One would expect pricing to reflect a premium to book value, given the strategic value of the assets and the significant time and risk that anyone would otherwise take to replicate a portfolio of this size in Singapore.”

A representative for United Engineers declined to comment. OCBC and Great Eastern have hired Credit Suisse Group AG to advise on the strategic review of their stakes in United Engineers, the companies said in a joint Singapore exchange filing Thursday. The review is ongoing, and there’s no certainty it will result in a transaction, according to the filing.

OCBC, Great Eastern and the bank’s founding Lee family own more than 30 percent of United Engineers, people with knowledge of the matter said in September. Buying their shareholdings would trigger a mandatory takeover offer for the company under Singapore rules.

— With assistance by Elffie Chew

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