This article first appeared in The Edge Financial Daily on September 20, 2017
SINGAPORE: Singapore’s Great Eastern Holdings Ltd is said to have engaged at least one Malaysian bank to explore selling its stake in its Malaysian operations for as much as US$1 billion (RM4.19 billion).
According to Dow Jones Newswires, the 87%-owned subsidiary of OCBC Bank is among a number of insurers, including British life insurer Prudential plc and Japan’s Tokio Marine Holdings, to be in the midst of discussions on how to sell close to a third of their stakes in their respective Malaysian subsidiaries — with options including strategic stake sales, or initial public offerings in the country.
This alleged move by foreign insurers is seen as an effort to meet Bank Negara Malaysia’s June 2018 deadline to comply with its mandate, which requires that insurance companies within the nation be at least partially-owned by local players.
People familiar with the matter have told Dow Jones that Prudential has yet to decide on the structure of its share sale, while a Tokio Marine representative had confirmed that the company is currently exploring options for complying with the rules set by Malaysia’s central bank.
The new syndicate’s sources added that combined, foreign insurers’ sales of their stakes in their Malaysian subsidiaries could raise almost US$3 billion over the next nine months.
Based on information provided by investment bankers who were not named, Dow Jones has identified Employees Provident Fund, Malaysia’s largest state pension fund, and state asset manager Permodalan Nasional Bhd as possible buyers of the foreign insurance company stakes.
Over on the Singapore Exchange, OCBC shares slid 11 Singapore cents (34 sen) to close at S$11, with a market capitalisation of S$46.25 billion. — The Edge Singapore