Source of article: THE STRAITS TIMES

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What’s Next for Minority Shareholders After Allianz’s Decision to Call Off the Income Acquisition?

Minority shareholders who purchased shares in Income when it operated as a co-operative were aware that their investment came with limited liquidity options. They understood that there was no established market to trade these shares and that Income’s primary purpose was to fulfill a social mission—providing affordable insurance for Singaporeans.

From the perspective of a potential corporate investor, acquiring new shares in Income is more appealing than buying out existing shareholders. Investing in newly issued shares ensures that the capital raised remains within the company, supporting its growth and operations. On the other hand, a buyout of existing shareholders not only requires a significant upfront investment but also necessitates additional capital injections to meet Income’s working capital needs after the acquisition.

Moreover, any prospective investor would face the challenge of maintaining Income’s social mission while transforming it into a commercially viable entity. Balancing a commitment to societal goals with the need to deliver profitability and accountability to stakeholders creates a significant hurdle. For many profit-driven organizations, this dual responsibility is a deterrent, making such acquisitions less attractive.

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