* Sun Life, Malaysia state investor to pay $597 million
* Deal seen pricey for Sun Life, but boosts long-term growth
* Deal to Insurer targeting southeast Asia
By Cameron French and Yantoultra Ngui
TORONTO/KUALA LUMPUR, Jan 17 Sun Life Financial
Inc and Malaysian state investor Khazanah will buy
Aviva Plc's Malaysian insurance joint venture with lender
CIMB Group for 1.8 billion Malaysian ringgit ($597 million) in a
deal that will accelerate Sun Life's push into southeast Asia.
Sun Life, Canada's third-largest insurer, has targeted the
region for expansion due to its rapid growth, high savings
rates, and relative underpenetration of insurance products.
"We see huge opportunity there. There are 600 million
people, the economies are growing, there is a growing middle
class" in Southeast Asia, Kevin Strain, president of Sun Life
Financial Asia, told Reuters.
Britain's Aviva, the world No. 6 insurer, is exiting markets
across the world to boost its underperforming share price. Last
month, Aviva sold its U.S. business for $1.8 billion.
Under the terms of the deal, Sun Life and Khazanah Nasional
Bhd will buy 49 percent each in CIMB Aviva Assurance
Berhad and Islamic insurer CIMB Aviva Takaful Berhad, which
together form the joint venture.
CIMB Group Holdings will retain a 2 percent stake.
Sun Life and Khazanah, which owns a 29.9 percent stake in CIMB,
will each pay half of the purchase price.
Khazanah owns stakes in some of the country's largest listed
firms, ranging from Axiata Group Bhd, Asia's
third-largest mobile services group outside Japan and China by
subscribers, to Malaysia's biggest property company by market
value, UEM Land Bhd.
"This is an important investment for Khazanah," said Azman
Mokhtar, Khazanah's managing director. "It marks not just an
opportunity to invest into an asset in a growth sector, but also
brings together a unique commercial partnership among three
strong parties in their respective areas."
The deal, which is not expected to have meaningful earnings
impact for Sun Life in the near term, includes a new 20-year
exclusive bancassurance agreement with CIMB Bank.
Analysts who follow Sun Life said the deal appeared to be on
the expensive side, but was still a positive for the company's
long-term growth goals.
"Off the cuff, it looks to be a bit pricey, but bigger
picture I think a step in the right direction," said Tom
Lewandowski, a St. Louis-based financial analyst at Edward
Sun Life is now present in seven Asian markets, including
four in Southeast Asia, following its launch of a joint venture
in Vietnam last year with PVI Holdings.
Shares of Sun Life rose 40 percent last year on the back of
recovering markets, and were up 1.2 percent at C$28.27 on the
Toronto Stock Exchange on Thursday. Aviva's shares fell 0.03
percent in London.
Sun Life, which also has a large U.S. presence that includes
mutual fund manager MFS, last year said it aimed to grow its
operating profit from its Asian division to C$250 million by
2015. Through the third quarter of 2012, the Asian unit had
produced C$79 million in operating profit.
Sun Life Chief Executive Dean Connor has said the company
will update its financial objectives, including a company-wide
goal of C$2 billion operating profit by 2015, once it closes its
pending $1.35 billion sale of its U.S. annuity business later