* Deal expected to close by end 2013
* Thai Life among nation's top three life insurers
* Deal is fourth Japanese financial sector deal in SE Asia
By Taiga Uranaka and Denny Thomas
TOKYO/HONG KONG, July 26 Meiji Yasuda Life
Insurance Co has agreed to pay about $700 million to buy a 15
percent stake Thai Life Insurance Co, underscoring the rising
appetite of Japanese companies for deals in the rapidly
expanding economies of Southeast.
Meiji Yasuda's purchase will make it the fourth financial
services acquisition by a Japanese firm in Southeast Asia this
year, bringing the year-to-date total value of Japanese M&A
deals in the region to about $6.6 billion.
Rising personal income in Southeast 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
To tap into that growth, cashed-up Japanese insurers and
banks have turned into aggressive buyers of Southeast Asian
financial services companies as they battle sluggish growth in
their home market.
Anna Tipping, a partner at law firm Norton Rose Fulbright,
said the strong cash positions of Japanese companies and slower
growth in the home market is encouraging them to pay top dollar
"It doesn't take much of a return on a new investment for
the return to look very attractive in contrast to what the money
is earning at home," Tipping added.
"This has meant that the Japanese can offer much higher
purchase prices than the prices able to be offered by Western
player who need a return on equity upwards of 15 percent to make
the investment worthwhile," she added.
Earlier this month, Japan's biggest lender, Mitsubishi UFJ
Financial Group (MUFG) agreed to pay $5.6 billion for a
controlling stake in Thailand's Bank of Ayudhya. In
May, Sumitomo Mitsui Financial Group agreed to acquire
a $1.5 billion stake in Indonesia's BTPN.
Other insurance M&A deals expected in the region include PT
Bank Negara Indonesia's planned sale of an up to 40
percent of its life insurance unit, a deal estimated at around
$800 million. BNP Paribas is handling the sale.
Meiji and Thai Life announced the deal in separate
statements on Friday without disclosing the deal's value. A
separate source told Reuters that Meiji has agreed to pay about
$700 million for the stake, confirming a Reuters report from
Meiji Yasuda, Japan's second-largest life insurer by premium
income after Nippon Life Insurance Co, beat Sumitomo
Life Insurance Co to win the auction that also
attracted private equity firms Carlyle Group LP, KKR & Co
and CVC Capital Partners.
Thai Life, controlled by the Thailand's Chaiyawan family, is
among the nation's top three life insurers, having earned 12.4
billion baht ($398.65 million) premiums in 2012, up 40 percent
from last year.
The deal is expected to close by the end of the year.
Barclays advised Thai Life on the deal, Thai Life
said in a statement. J.P. Morgan advised Meiji, sources
previously told Reuters.