KUALA LUMPUR (Nov 15): MAA Group Bhd is divesting an 85% stake in its Philippine general insurance business — MAA General Assurance Philippines Inc — to Triple P Philippines Pte Ltd for US$49.3 million (about RM234.86 million) cash, with an option to sell the remaining 15% stake for US$8.7 million within a 14-month period.
The total selling price of US$58 million was arrived at after taking into consideration an implied price-to-book ratio of about 1.64 times based on MAA General Assurance’s audited net assets of RM168.44 million as at end-2022, MAA Group said in a stock exchange filing on Wednesday.
Of the total proceeds to be raised from the disposal, MAA Group is allocating RM187.7 million for future investment opportunities, RM32.18 million for working capital, RM41.8 million for repayment of shareholder’s loan, RM13.54 million for repayment of intercompany loans and the remaining RM1.1 million for estimated expenses for the divestment process.
MAA Group said as its original cost of investment since 2001 amounted to RM78.16 million, it expects to realise a gain on disposal of about RM110.75 million.
General insurance is MAA Group’s largest revenue contributor, representing 66% of its total revenue for the financial year ended June 30, 2023 (FY2023), followed by its hospitality business’ 16% and education services’ 10%.
Nonetheless, the group said its board of directors “took cognisance of the potential growth of the general insurance business going forward which includes but is not limited to additional capital investment”.
Coupled with the continued challenging operating environment of the Philippines business moving forward, MAA Group said the offer by Triple P represents an opportune time for it to divest MAA General Assurance and to refocus its resources to expand existing business segments.
The divestment requires shareholders’ approval via a general meeting, and UOB Kay Hian Securities (M) Sdn Bhd has been appointed as the principal adviser for the proposed disposal.
Shares of MAA Group closed half sen or 1.4% lower at 34.5 sen on Wednesday, giving it a market capitalisation of RM90.99 million.