KUALA LUMPUR • Khazanah Nasional, the US$27 billion (S$36.3 billion) Malaysian sovereign fund, is weighing a bid for control of the insurance operations of billionaire Quek Leng Chan's Hong Leong Financial Group, people with knowledge of the matter said.

Khazanah is considering an offer for Hong Leong Financial's 70 per cent stake in Hong Leong Assurance and its 65 per cent holding in Hong Leong MSIG Takaful, according to the people.

A bid could be valued at about RM3.2 billion (S$1 billion), one of the people said, asking not to be identified as the information is private. Any purchase would add to the US$10.3 billion (S$14 billion) of insurance acquisitions in South-east Asia in the past five years, data compiled by Bloomberg show.

Khazanah said in 2014 it is seeking more insurance investments in Asia, which would add to holdings in domestic companies including some of the biggest banks, power producers and wireless operators.

"Hong Leong Financial's shareholders will immediately get a windfall if the deal is done," Mr James Lau, investment director at Pheim Asset Management Asia, said yesterday.

"For Khazanah, it probably sees the purchase as a good opportunity to invest in a profitable business."

Shares of Hong Leong Financial rose 0.9 per cent, the most in more than a week, to RM15.20 in Kuala Lumpur yesterday. The benchmark FTSE Bursa Malaysia KLCI Index declined 0.02 per cent.

Hong Leong Financial said last month Malaysia's central bank had no objection to it starting talks with "certain parties" on the sale of its stakes in the two insurance units.

A representative for Khazanah declined to comment. Mr Tan Kong Khoon, the chief executive officer of Hong Leong Financial, did not immediately answer a call to his office seeking comment.

BLOOMBERG