Foreign insurers 'planning US$2 billion of Malaysia deals'

KUALA LUMPUR (BLOOMBERG) - Overseas insurers including Prudential are pursuing plans to sell stakes in their Malaysian units, in deals that could raise at least a combined US$2 billion (S$2.73 billion) and help them comply with foreign ownership limits, people with knowledge of the matter said.

Prudential has asked banks to pitch for a role advising on a domestic initial public offering of its Malaysian unit, an option it is considering alongside a potential stake sale to an investor, according to the people.

Singapore's Great Eastern Holdings is also exploring cutting its local holding to 70 per cent through a sale or IPO, the people said, asking not to be identified because the details are private. A sale of a 30 per cent stake in Great Eastern Life Assurance (Malaysia) could raise about RM5 billion (S$1.64 billion), while the disposal of a similar stake in Prudential Malaysia Assurance would fetch at least RM3 billion, the people said.

Japan's Tokio Marine Holdings has appointed a bank to advise on options for cutting its stake in its local unit, which could raise around RM1 billion, according to one of the people. Foreign insurers have until end of June 2018 to reduce their holdings in local firms to 70 per cent at most, one person said.

The country's central bank has been weighing tougher enforcement of a cap on foreign ownership as it seeks to boost local participation in the industry, people familiar with the matter said in April.

Representatives for Great Eastern and Prudential declined to comment, while a representative for Tokio Marine did not immediately answer e-mailed questions. The central bank will continue to engage with the insurers on their plans, Bank Negara Malaysia said in a statement, declining to comment further.

Any companies that opt to pursue IPOs would join Manulife Holdings and Allianz Malaysia, the only local insurers with majority foreign ownership that are traded on the Kuala Lumpur exchange.

The deals would help extend a rebound in Malaysian first-time share sales, which have raised US$1.7 billion this year, up from US$255 million during the same period in 2016, according to data compiled by Bloomberg.