Carlyle, KKR board Asia insurance deal train with Thai Life bid: sources

HONG KONG Tue Mar 12, 2013 1:52am EDT

A general view of the lobby outside of the Carlyle Group offices in Washington, May 3, 2012. REUTERS/Jonathan Ernst

A general view of the lobby outside of the Carlyle Group offices in Washington, May 3, 2012.

Credit: Reuters/Jonathan Ernst

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HONG KONG (Reuters) - Carlyle Group LP (CG.O) and KKR & Co LP (KKR.N) are among the bidders to have made first round offers to buy a minority stake in Thai Life Insurance Co Ltd, in a deal said to be worth about $500 million, according to people close to the auction.

Malaysian sovereign wealth fund Khazanah Nasional Bhd has also made a bid, the people said, as the growth behind Asia's insurance industry has fueled dealmaking across the sector.

Rising personal income in Asia is giving, for the first time in many cases, individuals and families the ability to afford insurance. That new demand has boosted stock prices and corporate valuations, culminating in a spate of M&A transactions.

Unlisted Thai Life, the country's second biggest life insurer, is planning to sell a stake of about 20 percent in the company. It is set to be Thailand's third insurance deal in the past year, while across Southeast Asia at least three other insurance deals are brewing.

Private equity firm CVC Capital Partners Ltd CVC.UL, Japan's Meiji Yasuda Life Insurance Co Ltd and Sumitomo Life Insurance Co Ltd are among the other suitors vying for the Thai Life stake, the sources added. First round bidding closed on Monday and a shortlist is expected within a week, one of the sources said.

Sumitomo Life, Meiji Yasuda and Khazanah declined to comment. Thai Life officials were not available for immediate comment. Carlyle, CVC and KKR declined to comment. Sources declined to be identified as the sale process is confidential.

HOT REGION

Southeast Asia has emerged as a key battleground for global and regional insurers, with international companies attracted by the region's rapidly growing market.

Swiss Re Economic Research & Consulting forecasts that life insurance premiums in emerging Asia - a region comprising of seven countries, including China, India, Malaysian, Thailand - will grow at a compounded annual rate of 8.5 percent between 2011 and 2021 to $631 billion. By contrast, premiums in industrialized countries will expand 2.9 percent in the same period, according to Swiss Re.

Insurance M&A in Southeast Asia hit a record $13.1 billion last year, compared with a total of $3.9 billion in the previous four years, according to Thomson Reuters data.

The Thai Life auction comes at a time when at least three other insurance deals are being planned in the region.

They include the sale of a 40 percent stake in Indonesia's Panin Life by PT Panin Financial (PNLF.JK), according to previous Reuters reports. PT Bank Negara Indonesia Tbk (BBNI.JK) is planning to sell a $500 million stake in its life insurance unit, and Malaysian banking group AMMB Holdings (AMMB.KL) has also embarked on the sale of its life division, according to media reports.

Southeast Asia's strong premium growth has attracted global insurers to the region. Last year, Prudential Plc (PRU.L) struck a $590 million deal to buy the insurance unit of Thailand's Thanachart Bank, and Hong Kong businessman Richard Li bought ING's (ING.AS) operations in Hong Kong, Macau and Thailand.

Pan-Asian insurer AIA Group Ltd (1299.HK) acquired ING's Malaysian unit last year.

Thai Life had 15.3 percent of the country's life insurance market with annualized premium equivalent of 6.2 billion baht ($202 million) as of the end of the second quarter of 2011, according to Thai Life Assurance Association data.

Under the proposed deal Thai Life, controlled by the Chaiyawan family, is likely to issue new shares. It was not immediately clear how the company plans to use the proceeds.

(Additional reporting by Taiga Uranaka in TOKYO, Yantoultra Ngui in KUALA LUMPUR, Clare Baldwin in HONG KONG and Khettiya Jittapong in BANGKOK; Editing by Michael Flaherty and Daniel Magnowski)

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