Swiss Re still seeks an investor
• Talks with SoftBank fail after nearly four months
Swiss Re said it would continue to welcome an anchor investor after Masayoshi Son’s SoftBank Group ended its pursuit of a stake in the world’s secondlargest reinsurer.
The collapsed talks mark the end of nearly four months of deliberations about how SoftBank would invest in Swiss Re, though the two companies may yet agree to collaborate on some businesses. A purchase of a stake would have given the Japanese technology and investment company access to steady cash flows and help diversify its sources of income.
“We are still on very friendly terms — it wasn’t a sour end to the talks,” Swiss Re spokesman Willy-Andreas Heckmann said by phone. The Zurich-based reinsurer is still open to “interesting anchor shareholders”, Heckmann said.
He declined to say whether Swiss Re was in discussions with other potential investors.
The two sides had disagreed about the price and size of the stake and how much management control would be handed to Son, people with knowledge of the matter said earlier in May. Swiss Re’s reluctance to issue new shares meant SoftBank would have been forced to buy its stake on the open market.
The Swiss company “will also further explore business ideas between Swiss Re’s operative entities and the portfolio companies of SoftBank”, according a statement on Monday.
Swiss Re, which has a market value of about Sf31.9bn ($32.1bn), was up 0.5% at Sf91.06 at 12.36pm in Zurich, leaving the shares little changed since the start of the year
NEW FOCUS
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Issues at SoftBank, such as the pending merger of its Sprint business with T-Mobile US and the initial public offering of SoftBank’s mobile unit, had shifted Son’s focus, the people said.
“The termination of discussions about a potential minority stake are not really surprising, but still somehow disappointing,” Bank Vontobel analyst Stefan Schuermann said in a note to investors. “Now, not much can be expected from SoftBank.”
Though it was initially reported in February that SoftBank was interested in as much as a third of the insurer, Swiss Re later said the stake under discussion was 10% or less.
Earlier this month, Swiss Re could shed little light on progress after reports that the deal had stalled. Asked about the talks on May 4, chief financial officer John Dacey said talks were continuing and the company had nothing to add.
RADICAL CHANGE
Still, Swiss Re CEO Christian Mumenthaler said in February that he would welcome an anchor investor in a business where results can change radically from one year to the next. “It’s not a bad thing,” he said at a conference in Zurich. “If you ask me, just high level, is it attractive, I would say yes.”
The traditional reinsurance model has come under pressure in recent years as hedge funds piled into the industry.
In addition to such new money, known as alternative investors within reinsurance, competition is rising from the likes of emerging-market rivals such as India’s GIC Re and Qatar Re.
SoftBank’s Son has a net worth of about $13bn and is Japan’s third-richest person, according to the Bloomberg billionaires index.
THE TERMINATION OF DISCUSSIONS ABOUT A POTENTIAL MINORITY STAKE ARE NOT REALLY SURPRISING