Singapore’s government has stepped in to halt the proposed agreement between European employer Allianz and NTUC Income.  ,
Under the proposed deal, which was announced on Jul 17, Allianz may had acquired a majority interest in Income. Concerns over whether Income may continue its societal vision were a result of the statement.
The government says it is open to new arrangements if the concerns raised are fully addressed, but it wo n’t allow the proposed transaction to proceed.
When the bargain was first made public, several prominent people had spoken out against it.  ,
In a ministerial statement released on Monday ( October 14), Culture, Community, and Youth Minister Edwin Tong told parliament that the government has evaluated the proposed deal and has decided that it would not be in the public attention for the deal to continue in its present form.
The European financial service giant , announced its plans to buy , a majority stake in Income , for around US$ 1.6 billion in July.  ,
NTUC Business said at the moment that it would remain , a” large” shareholder if the price went through.
The Ministry of Culture, Community and Youth (MCCY ) is not confident that the proposed transaction would not affect Income, or the co-op movement as a whole to carry out its social mission, he added.  ,
We find it challenging to balance Income’s representations to MCCY during the corporatization exercise with the proposed significant capital reduction, which is intended to increase its financial strength and build up, according to Mr. Tong.  ,
Money, a previous co-op, was corporatised in 2022. According to the secretary, it argued that it was exempt from Part 88 of the Co-operative Societies Act, which allowed it to take over nearly S$ 2 billion in surplus to the new business entity.  ,
The proposed money decline in the Income-Allianz offer “runs store” to the idea for why the provision was given, he added.  ,
” Instead of the supervisory provision in 2023, the Income Co-op’s accumulated deficit of about S$ 2 billion may have gone to the CSLA after being wound up to support the co-op activity in Singapore as a whole,” he said.
According to him, “MCCY has not seen any structure in the current exchange that accounts for the estimated S$ 2 billion deficit that was transferred to the new business entity as a result of the exemption,” he continued.  ,
” There is no clarity on how this sum will be directed towards advancing Income’s social mission” . ,
After the proposed deal, MCCY is not confident that Income will be able to carry out its social mission, according to Mr. Tong.  ,
No” distinct binding measures” or structural safeguards are included in the agreement to ensure Income’s social mission is fulfilled.
What Income does do following the money extraction is ambiguous, according to Mr. Tong.  ,
MCCY acknowledges that it is making this determination in” good faith,” and NTUC Enterprise has stated that it intends to carry on Income’s cultural vision.  ,
” But MCCY is not confident that NE’s intentions, or the assurances Income gave earlier to MCCY, can be upheld” . ,
Prior to the proposed purchase, MCCY was aware that the new Income entity would have a minority of the board positions and no authority to select the new entity’s chairman.  ,
According to Mr. Tong, these things would n’t had alone caused MCCY to object to the purchase.
” Nevertheless, taken together with the proposed investment separation and the lack of structural safeguards in the package to ensure the continuation of Income’s social vision, cumulatively, they pose a danger that MCCY courts not to be acceptable”, he added.  ,
” As such, it is the Government’s view that it is not in the public interest for the transaction, in its current form, to proceed” . ,
The minister emphasized that the government understands and accepts that the strategic goal of Income’s corporatization training and possible collaboration with Allianz was to develop it and render it more financially stable over the long run.  ,
Additionally, the Government is unconcerned with Allianz’s position or eligibility to acquire a majority stake in Income.
The state is solely concerned over the “terms and construction” of this particular deal, with the environment of the preceding corporatisation training, said Mr Tong.  ,
He continued, noting that this was why Income was a co-op and that the Part 88 exemption and its goals had to be taken into account.  ,
The president’s assessment of the issuer’s viability “must get beyond regulatory considerations only”.  ,
” While we will not permit the proposed deal to continue, we are still open to any new arrangement that Income may wish to follow, whether with Allianz or any other partners, as long as the issues raised are completely addressed.”