Two bid for Maika’s OCA stake

  • Business
  • Thursday, 06 Jan 2011

PETALING JAYA: Two financial institutions have put in a bid of RM1.59 per share to acquire the controlling stake in Oriental Capital Assurance Bhd (OCA) from Maika Holdings Bhd, according to sources. A source said the two interested financial institutions consisted of a bank and an insurance company that had tendered in their bids between last October and November.

“The bids are currently being deliberated by Bank Negara,” the source told StarBiz yesterday.

In terms of value, the source said OCA's net tangible assets per share were about RM1.22 as of December 2009. “And the RM1.59 per share is at 1.3 times price-to-book,” said the source.

OCA was reported to have a paid-up capital of RM100mil and total assets valued in excess of RM380mil. Its niche strength is in onshore and offshore oil and gas and marine hull and cargo classes of business.

Maika is currently controlled by G Team Resources & Holdings Bhd, which in turn are helmed by port tycoon Tan Sri G. Gnanalingam and businessman Datuk S. Kunasingam.

The 74.16% Maika stake in OCA is equivalent to 74.2 million shares.

The price tags for general insurers in the past have ranged from one to over two times NTA.

Last September, US insurer ACE Ltd agreed to buy Malaysian non-life insurer Jerneh Insurance Bhd for RM654mil from Jerneh Asia Bhd and Paramount Corp Bhd at an acquisition value of 2.24 times price-to-book.

In 2007, Allianz acquired Commerce Assurance for 2.5 times to three times NTA.

To recap, Maika initially acquired 3.3 million shares in the insurer between 1986 and 1988.

Six years later, it acquired an additional 24 million shares in the company, hence emerging as a major shareholder with 63.6% stake of the then paid-up capital of RM42.7mil and a year later, it acquired a further 3.3 million shares.

It has been reported that the average purchase price of OCA by Maika in the books as at end of December 2006 is 81 sen per share.

G Team had last May acquired all of Maika's 125 million shares at 80 sen apiece in cash from some 66,000 Malaysian Indian investors.

This would allow it to sell Maika's assets to pay off liabilities and wind up the company.

To date, G Team has secured about 95% stake in Maika as some the remainder shareholders have either passed away or are difficult to contact.

Maika was initially set up as MIC's investment arm but since its establishment 26 years ago, Maika has been plagued with issues of mismanagement, resulting in no returns on investment so far to its shareholders.

The disposal of the OCA stake is one of the three important resolutions at Maika's upcoming AGM on Jan 19.

The two other primary resolutions to be passed at the AGM are the disposal Maika's property, plant equipment and biological assets valued at about RM5mil and the voluntary winding up of Maika as well as settlement of its liabilities.

Related Stories: Last call to Maika shareholders 80% Maika shares redemption G Team’s offer to take over Maika turns unconditional G Team boosts paid-up capital G Team just short of 4.56% for Maika takeover Extension urged for Maika offer G Team needs 20% more approval for Maika offer to become unconditional Maika concurs with independent adviser Maika's end-2008 accumulated losses at RM106.7mil

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