Pru­den­tial to buy Thai in­surer for 368m pounds

The Pak Banker - - Front Page -


Pru­den­tial Plc (PRU), the U.K.'s big­gest in­surer by mar­ket value, will buy the life in­sur­ance busi­ness of Thanachart Bank Pcl, which is part-owned by Canada's Bank of Nova Sco­tia (BNS), for as much as 368 mil­lion pounds ($590 mil­lion).

Pru­den­tial will pay Bangkok-based Thanachart 358 mil­lion pounds in cash when the trans­ac­tion is com­pleted and a fur­ther 10 mil­lion pounds 12 months later, the Lon­don-based in­surer said in a state­ment through the Sin­ga­pore stock ex­change. The trans­ac­tion is sub­ject to reg­u­la­tory ap­proval and is expected to close in the first quar­ter of 2013, the com­pany said. Pru­den­tial Life As­sur­ance (Thai­land) Pcl, a unit of the U.K. in­surer, will also es­tab­lish an ex­clu­sive 15-year part­ner­ship with Thanachart Bank, the Lon­don-based com- pany said in the state­ment. The joint ven­ture will de­velop the group's so- called ban­cas­sur­ance busi­ness, which is fo­cused on dis­tribut­ing in­sur­ance prod­ucts via banks.

"This trans­ac­tion builds on Pru­den­tial's strat­egy of fo­cus­ing on the highly at­trac­tive mar­kets of South­east Asia," the group said in the state­ment. "Life in­sur­ance pen­e­tra­tion in Thai­land re­mains low at only 2.7 per­cent, pro­vid­ing sub­stan­tial long-term prof­itable growth op­por­tu­ni­ties." The ac­qui­si­tion of Thanachart Life, which is among the top 10 in­sur­ers by gross pre­mi­ums in Thai­land, will dou­ble Pru­den­tial's mar­ket share in the coun­try, it said. The in­sur­ance com­pany had profit af­ter tax of 1.23 bil­lion baht ($40 mil­lion) in the 12 months ended June 30, ac­cord­ing to the state­ment.

Thanachart Cap­i­tal Pcl (TCAP), the par­ent of pri­vate­ly­held Thanachart Bank, rose as much as 6 per­cent to 39.75 baht in Bangkok, the big­gest in­tra­day gain in four weeks. The stock was at 38.50 baht as of 11:08 a.m. lo­cal time.

"Thanachart will make a sub­stan­tial profit from this trans­ac­tion," Tanadech Rungsrithananon, an an­a­lyst at Krungsri Se­cu­ri­ties Co. in Bangkok, said by phone to­day. "The part­ner­ship with a global brand like Pru­den­tial will en­able Thanachart to sell more in­sur­ance prod­ucts through its branch net­work."

Thanachart Cap­i­tal, which owns 51 per­cent of the bank­ing unit, may book a gain of at least 7 bil­lion baht from the trans­ac­tion in the first quar­ter of 2013, ac­cord­ing to Tanadech, who has a trad­ing buy rat­ing on the stock with a share-price es­ti­mate of 44.50 baht Thanachart Bank, Thai­land's fifth big­gest, has more than 4 mil­lion cus­tomers and 630 branches, ac­cord­ing to Pru­den­tial.

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