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OEL (Holdings) plans to take on new investors amid diversification moves

CATALIST-LISTED property management company OEL (Holdings) plans to diversify into early childhood childcare and health education in Singapore, as well as the healthcare industry, through a share placement to investors led by controlling shareholder Zhang Jian.

Such a diversification would allow the group to enter new markets and diversify its revenue streams, "thus potentially generating long-term sustainable growth across diverse economic conditions", the board said, in laying out its reasoning for the move.

Mr Zhang, who owns 20.7 per cent of OEL, and chief executive Zhao Xin, who has a 2.1 per cent stake, are among the 16 investors who inked a deal on Wednesday to subscribe for placement shares and warrants at S$0.027 apiece.

Meanwhile, some of the new shareholders are executives of one-year-old Shanghai-based medical technology and equipment company Healthcare Co, with the OEL board saying that "there are very preliminary discussions with Healthcare Co on future collaborations" ongoing.

The exercise is expected to yield net proceeds of about S$7.64 million altogether, assuming that the warrants are fully used for new shares, to be used for both acquisitions and investments, and for working capital purposes that include repaying shareholder loans to Mr Zhang.

OEL said that it would call an extraordinary general meeting to get shareholders' approval for the placement to Mr Zhang and Mr Zhao, who are deemed interested subscribers, as well as their approval for the planned diversification into the new businesses.

The company will also seek shareholders' approval for OEL to change its name "to one which is reflective of its new businesses".

But the board warned shareholders and potential investors to exercise caution when trading, as there is no certainty that the proposed placement will go through.

After the warrants are exercised, the 16 investors would hold a combined 47.3 per cent of the enlarged share capital of OEL, with Mr Zhang's stake inching up to 20.8 per cent.

The price tag for the placement marks a premium of 1.12 per cent to the volume-weighted average for trading on Monday, the last full market day.

OEL, which called a trading halt on Tuesday morning, last changed hands at S$0.026.