Prudential, Sun Life among bidders for CBA's Indonesia insurance business-sources

Great Eastern Holdings

28/09/2018 08:21

* Other bidders include Hong Kong's FWD, Singapore's Great
Eastern
    * Bidders likely to be short-listed further within next few
weeks
    * Southeast Asia seeing growing number of M&A deals in
insurance  
 

    By Sumeet Chatterjee
    HONG KONG, Sept 28 (Reuters) - At least five insurers,
including Britain's Prudential  PRU.L  and Canada's Sun Life
 SLF.TO , have bid for Commonwealth Bank of Australia's (CBA)
 CBA.AX  majority stake in an Indonesian insurance venture,
people with knowledge of the process said.
    The stake sale, which could value the venture at between
$250 million and $300 million, has also received second-round
bids from insurer FWD Group, Singapore-listed Great Eastern
Holdings  GELA.SI , and Indonesia's Sequis Life, three people
said.
    Australia's biggest lender is selling its 80 percent 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.  urn:newsml:reuters.com:*:nL4N1P634G
    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.  urn:newsml:reuters.com:*:nL3N1RB02V
    The second-round bids were submitted last week, the people
said, adding potential buyers are likely to be further
short-listed 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 did not immediately respond
to a request for comment.
    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.  urn:newsml:reuters.com:*:nL4N1V604R
    CBA sold its insurance business in Australia and New Zealand
to AIA Group  1299.HK  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.  urn:newsml:reuters.com:*:nL3N1OD2PN
    
    GROWING MARKET
    Asia is a battleground for foreign insurers including Aviva
 AV.L , 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  ZURN.S  said on Thursday it
was acquiring an 80 percent stake in Indonesia's Adira Insurance
from PT Bank Danamon Indonesia  BDMN.JK  and a minority investor
for at least $414 million.  urn:newsml:reuters.com:*:nL8N1WD0MX
    FWD, owned by Hong Kong billionaire tycoon Richard Li, has
agreed to buy HSBC Holdings'  HSBA.L  stake in a Malaysian
insurance joint venture as part of a plan to expand its presence
in Asia, sources told Reuters last month.  urn:newsml:reuters.com:*:nL3N1VJ27U
    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 percent in
2007 in what was then a 50:50 joint venture. The remaining 20
percent 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.

 (Reporting by Sumeet Chatterjee; Additional reporting by
Anshuman Daga in Singapore, Paulina Duran in Sydney and Fanny
Potkin in Jakarta; Editing by Muralikumar Anantharaman)
 ((sumeet.chatterjee@thomsonreuters.com; +852-2847 2094; Reuters
Messaging: sumeet.chatterjee.thomsonreuters.com@reuters.net))