HK firm to buy HSBC’s stake in M’sian insurance venture

HONG KONG: Hong Kong-based insurer FWD Group has agreed to buy HSBC Holdings Plc’s stake in a Malaysian insurance joint venture as part of a plan to expand its presence in Asia, three people familiar with the matter said.

FWD, owned by tycoon Richard Li, is acquiring the British lender’s 49% stake in HSBC Amanah Takaful (Malaysia) Bhd initially, with plans to ultimately own a majority by buying some shares from the existing partners, they said.

The deal shows that foreign insurers are keen on Malaysia, drawn by its strong economic growth, rising middle-class income and low insurance penetration, despite lingering regulatory uncertainty over the insurance sector’s foreign ownership rules.

The exact value of the deal was not immediately clear, with one of the people putting it at less than US$100 million (RM409.6 million). It is expected to be completed by end of this year, subject to approval by Bank Negara Malaysia (BNM).

A foray into the Southeast Asian country by FWD will add to its Asian market footprint that already covers Indonesia, Japan, Singapore, the Philippines, Thailand, and Vietnam, besides its home market.

HSBC, which has a strong Asian insurance business presence, has been looking to exit the Malaysian insurance joint venture in the last one year to focus on its core banking offerings, two of the people said.

Last year, the Malaysian unit of German insurer Allianz SE said it had discontinued talks with the shareholders of HSBC Amanah Takaful to acquire up to 100% stake in the company.

Malaysia’s JAB Capital Bhd owns 31% in the venture, while Employees Provident Fund Board of Malaysia (EPF) controls 20%, according to HSBC Amanah Takaful’s website.

FWD and HSBC declined to comment. A spokesman for BNM, which is also the country’s central bank, said it does not comment on individual firms, while JAB Capital and Malaysia’s largest pension fund EPF did not reply to requests for comment.

The people declined to be named as the deal was not public yet. – Reuters