In­sur­ers bat­tle for CBA’s In­done­sia unit

Viet Nam News - - MARKETS -

HONG KONG — At least five in­sur­ers, in­clud­ing Bri­tain’s Pru­den­tial and Canada’s Sun Life, have bid for Com­mon­wealth Bank of Aus­tralia’s (CBA) ma­jor­ity stake in an In­done­sian in­sur­ance ven­ture, peo­ple with knowl­edge of the process said.

The stake sale, which could value the ven­ture at be­tween US$250 mil­lion and $300 mil­lion, has also re­ceived sec­on­dround bids from in­surer FWD Group, Sin­ga­pore-listed Great East­ern Hold­ings, and In­done­sia’s Seq­uis Life, three peo­ple said.

Aus­tralia’s big­gest lender is sell­ing its 80 per cent stake in PT Com­mon­wealth Life, which has a pres­ence in 20 In­done­sian cities with more than 500,000 in­di­vid­ual and group cus­tomers, Reuters re­ported in Jan­uary.

The in­ter­est in PT Com­mon­wealth Life is the lat­est case of for­eign in­sur­ers want­ing to ex­pand their life busi­ness in South­east Asia, a re­gion of more than 600 mil­lion peo­ple.

In March, CBA con­firmed that it was un­der­tak­ing a strate­gic re­view of its In­done­sian life in­sur­ance busi­ness, and that it has en­gaged ex­ter­nal ad­vis­ers for guid­ance on a pos­si­ble sale of the ven­ture.

The sec­ond-round bids were sub­mit­ted last week, the peo­ple said, adding po­ten­tial buy­ers are likely to be fur­ther short­listed within the next few weeks be­fore a de­ci­sion is made by CBA.

Rep­re­sen­ta­tives of CBA, FWD, Great East­ern, Pru­den­tial, and Sun Life de­clined to com­ment. Seq­uis said it could not com­ment now as it was “bound by NDA”, or non-dis­clo­sure agree­ment.

The peo­ple de­clined to be named as they were not al­lowed to talk to the me­dia about the deal process.

The Aus­tralian lender has been sell­ing some of its busi­nesses over the past year af­ter suf­fer­ing a string of scan­dals in­clud­ing rate-rig­ging charges, breaches of anti-money laun­der­ing laws, and fees charged to dead clients.

CBA sold its in­sur­ance busi­ness in Aus­tralia and New Zealand to AIA Group for $3.1 bil­lion last year. It also said this year its loss-mak­ing dig­i­tal bank­ing unit in South Africa was be­ing sold for an undis­closed sum.

The In­done­sian stake sale, if com­pleted, will also be an­other in­stance of Asian banks ex­it­ing the in­sur­ance sec­tor to free up cap­i­tal and fo­cus on their core bank­ing busi­nesses amid tougher reg­u­la­tory cap­i­tal buf­fer re­quire­ments.

Asia is a bat­tle­ground for for­eign in­sur­ers in­clud­ing Aviva, Pru­den­tial and Sun Life, at­tracted by the re­gion’s lower in­sur­ance pen­e­tra­tion lev­els and faster growth rates for in­sur­ance pre­mi­ums.

The peo­ple said the for­eign in­sur­ers com­pet­ing for CBA’s stake in the In­done­sian ven­ture were look­ing to bol­ster their pres­ence in South­east Asia, which has seen a hand­ful of M&A deals in the last cou­ple of years in the in­sur­ance sec­tor.

Swiss group Zurich In­sur­ance said on Thurs­day it was ac­quir­ing an 80 per cent stake in In­done­sia’s Adira In­sur­ance from PT Bank Dana­mon In­done­sia and a mi­nor­ity in­vestor for at least $414 mil­lion.

FWD, owned by Hong Kong bil­lion­aire ty­coon Richard Li, has agreed to buy HSBC Hold­ings’ stake in a Malaysian in­sur­ance joint ven­ture as part of a plan to ex­pand its pres­ence in Asia, sources told Reuters last month.

Sun Life, which op­er­ates in seven Asian mar­kets in­clud­ing China, Hong Kong, In­dia, the Philip­pines and Malaysia, has in re­cent years made a series of deals in the re­gion to ac­quire busi­nesses or raise its own­er­ship in sev­eral of those mar­kets.

CBA raised its hold­ing in Com­mon­wealth Life to 80 per cent in 2007 in what was then a 50:50 joint ven­ture. The re­main­ing 20 per cent is owned by an In­done­sian firm, PT Gala Arta Jaya, ac­cord­ing to the in­surer’s web­site.

Be­sides the in­sur­ance joint ven­ture, CBA also has a re­tail and busi­ness bank­ing pres­ence in In­done­sia. — REUTERS

A Com­mon­wealth Bank branch in the cen­tral busi­ness district of Syd­ney. — AFP Photo

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