Singapore-based insurer
Great Eastern Holdings has reportedly contacted at least one Malaysian bank for a potential deal to sell a chunk of its Malaysian operations for up to US$1 billion.
Great Eastern is one of several foreign-owned insurers in the Malaysian market, alongside UK-based Prudential and Japan-based
Tokio Marine, which are considering selling 30% of their shares to comply with the country’s foreign ownership requirements.
Bank Negara Malaysia, the country’s central bank and financial regulator, imposed a June 2018 deadline for insurers to comply with the 70% foreign ownership cap. The cap was first instituted in 2009 and wholly foreign-owned insurers enjoyed exemptions, but the government decided to enforce it this year.
Malaysian institutional funds such as Employees Provident Fund and Permodalan Nasional Bhd are some of the buyers touted to buy stakes in the insurers, reports the Straits Times.
According to a research note by DBS Vicker Securities, divesting 30% of its Malaysian operations will have minimal impact on the bottomline of OCBC, Great Eastern’s parent firm. But it is expected to unlock some value for shareholders of OCBC and Great Eastern.
DBS Vicker Securities added that Great Eastern’s Malaysian unit brought in around 40% of the insurer’s pre-tax profit. This translates to around 6% of OCBC Group’s pre-tax profit.
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Foreign-owned insurers in Malaysia rushing to find domestic partners
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