Great Eastern Holdings in Talks With Malaysia’s Largest Pension Fund
A deal with the Singaporean insurer could fetch as much as $1 billionПодписывайтесь на наш канал @east_veter :)
Singapore-based insurer Great Eastern Holdings Ltd. G07 -2.03% is in exclusive talks with Malaysia’s largest pension fund to sell it a minority stake in its Malaysian insurance unit, a deal that could fetch as much as $1 billion, according to people familiar with the discussions.
The talks with the Employees Provident Fund is part of Great Eastern’s strategy to meet a Malaysian central bank deadline, set for June, mandating that insurers operating in the country are at least partially owned by locals. A stake in Great Eastern Life would allow EPF to ride on the growth prospect of Malaysia’s insurance sector.
Great Eastern’s Malaysia unit, Great Eastern Life Assurance (Malaysia) Bhd., is the oldest insurance company in the country. It had over 3 million policies in force and a network of 17,000 agents in Malaysia at the end of 2016, according to its website.
State-owned EPF managed 771.2 billion ringgit ($198 billion) worth of investment assets as of last September and is the world’s 15th-largest pension fund, according to Willis Towers Watson .
Negotiations are in early stages, with no certainty of a transaction, the people familiar said. Great Eastern could look to list its insurance unit through an initial public offering in Malaysia if no deal is reached, the people said.
Even if the deal fails through, EPF can still opt to partake in the potential listing of Great Eastern Life, albeit with a lower stake, they said.
Since the central bank’s mandate came down, foreign insurance firms operating in Malaysia have been looking at ways to trim stakes in their local units, either through sales of a minority stake to Malaysian firms or via an IPO. The firms have to bring down their stakes in their local insurance units by at least 30%, according to the bank.
The people familiar said such share sales could raise almost $3 billion.
Great Eastern declined to comment, while EPF didn’t immediately respond to a request for comment.
Foreign insurance companies operatig in Malaysia include British life insurer Prudential PLC. and Japan’s Tokio Marine Holdings Inc.
The life insurance penetration rate has held at around 55% since 2010—well below the central bank’s target of 75%.
People between the age of 15 and 64 to are expected to make up around 66% of the total population in Malaysia until 2040, according to the country’s department of statistics. A young, insurable population—coupled with rising consumer awareness—provides an attractive proposition for insurers, according to Kuala Lumpur-based AllianceDBS Research.