Sept 25 British insurer Aviva plc and Malaysian bank CIMB Group Bhd have set an Oct. 29 deadline for shortlisted suitors to place binding bids to buy their Malaysian insurance joint venture, in a deal worth at least $500 million, sources said.
Prudential Plc, Manulife Financial Corp and Sun Life Financial Inc are the remaining suitors for the venture after AIA Group Ltd dropped out of the race as it is close to grabbing ING's insurance unit in Malaysia, the sources, who had direct knowledge of the deal, said.
The Malaysian joint venture sale has generated interest from global insurers keen to tap growth prospects in Southeast Asia.
Malaysia is the third-biggest economy in the 10-member Association of Southeast Asian Nations grouping.
Individual Southeast Asian insurance markets are relatively small but life insurance premiums are growing fast there. Premiums in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam are forecast to average nearly 8 percent growth next year, more than twice the global average, Swiss Re estimates.
That growth is boosted by a booming middle class in these countries as they seek to protect and nurture their personal savings.
A binding bid is backed by firm funding plans and offers specific price, or a price range, to buy an asset.
Under an earlier plan, Aviva was to have sold its 49 percent stake in the joint venture as part of a global retreat to focus on its core markets.
But CIMB, Malaysia's second-biggest bank, now is also selling an up to 51 percent stake and has hired JPMorgan as an adviser, the sources said. Morgan Stanley is representing Aviva in the deal, sources have said earlier.
FOREIGN STAKE LIMIT
Malaysia does not allow foreign insurers to buy more than 70 percent stake in a domestic insurance company and it is not clear if CIMB will exit its entire 51 percent stake, or only sell as much to abide by the local rules.
CIMB and Aviva formed the venture in 2007, but the business has struggled to perform to potential, analysts say. The winner of the auction will get a new bancassurance deal with CIMB, which has 320 branches across the country, and the ability to sell insurance products to its customers.
The sellers are likely to look at the valuation fetched by Thanachart Bank's insurance business in Thailand, where Prudential Plc is seen as a leading contender, one of the sources told Reuters.
Aviva, Prudential, Morgan Stanley and JPMorgan declined to comment. Manulife, Sun Life and AIA were not immediately available for comment. CIMB officials also declined to comment.
The sources declined to be identified as the discussions were private.