Sun Life Financial eyes deals, Hong Kong with $5.8B to spend
Sun Life Financial Inc. is looking for deals in sectors facing heightened uncertainty.
The Canadian life insurer is seeking bank partnerships in Hong Kong, investments in riskier private credit and tuck-in real estate purchases. Amid geopolitical tensions, market volatility and the effects of the coronavirus pandemic, Sun Life’s top executives remain on the hunt for acquisitions.
“We came into COVID-19 with a pipeline of conversations underway, and those conversations continue,” chief executive Dean Connor said in a video interview. “We’re continuing to be actively out there talking to people about what’s possible.”
Acquisitions have been a common refrain for Sun Life in recent years. The Toronto-based company has about $5.8 billion available for deals. While Connor is seeking more tie-ups across the firm’s key pillars of Canada, the U.S., Asia and global asset management, he sees the pandemic stifling activity in the near term. “Not a lot of transactions take place because sellers are trying to figure out where they stand and are trying to consolidate their positions and they don’t want to sell at depressed values, and buyers are trying to figure out where they stand,” Connor said.
Sun Life shares have slumped 13 per cent this year, compared with a 21-per-cent decline for the S&P/ TSX insurance industry index.
The company is interested in deals in the seven Asian markets where it operates, including increasing stakes in joint ventures and striking partnerships with banks to distribute its insurance products, known as bancassurance. The firm would like to strike a bancassurance deal in Hong Kong along with other opportunities, even amid growing tensions with China that have some observers questioning the city’s future as an Asian financial hub.
“We’re not seeing Hong Kong as being an area that’s going to have problems in terms of a Canadian company that’s been there for a long time, that understands the market and understands the people and already has a business in China,” chief financial officer Kevin Strain said in the interview. “So I think it’s finding your way through all the noise, but there’s lots of business opportunities.”
Sun Life sees Hong Kong as offering long-term growth opportunities and a springboard for additional business with mainland China in the Pearl River Delta, which includes China’s tech centre of Shenzhen and the manufacturing hub of Guangzhou, said Strain.