* Thai Life may sell stake of at least 20 pct -sources
* Follows two deals in Thai insurance sector
* Announced Thai M&A soars to $18.7 bln so far this year
* Thai Life may draw interest from Japan suitors -sources
By Denny Thomas and Saeed Azhar
HONG KONG/SINGAPORE, Dec 4 Thai Life Insurance
Co Ltd may sell a stake of at least 20 percent, sources familiar
with the matter said, in a deal that could value the country's
No. 2 life insurer at about $2.5 billion and mark the third
auction in the domestic sector within a year amid a huge wave of
Highlighting fast-growing interest in one of Asia's most
underdeveloped insurance markets, the potential sale comes on
the heels of Prudential Plc's $590 million acquisition
of Thanachart Life Assurance in November and Hong Kong tycoon
Richard Li's purchase of ING's Hong Kong and Thailand
units for $2.1 billion in October.
Announced Thai M&A deals have soared to a record $18.7
billion so far this year on mostly outbound acquisitions,
overtaking the total value of deals in 2010 and 2011 combined,
according to Thomson Reuters data. In contrast, Asia-Pacific
ex-Japan deals are down 12 percent from last year to $298
Most of the deals are driven by cashed-up companies eager to
expand overseas and include an audacious $7.2 billion bid by
Thai tycoon Charoen Sirivadhanabhakdi for the shares he does not
own in Singaporean conglomerate Fraser and Neave. For
the inbound offers, suitors see steady growth and rising demand
for products such as consumer goods and financial services, not
to mention valuations that are only getting richer.
The Thai Life stake sale is expected to draw interest from
Japanese suitors and other financial institutions, said the
sources, who have direct knowledge of the matter and declined to
be identified as the matter is not public. Like any auction,
there is no guarantee the process will end in a sale.
The company, controlled by the Chaiyawan business family,
is likely to issue new shares as part of the deal, while the
founders are also expected to sell part of their stake, the
sources said. A minority holding may be less attractive to some
suitors, although Japanese insurers in the past have shown a
willingness to buy non-controlling stakes.
Thai Life's Duangduen Kongkasawad, executive vice president
for communications, told Reuters that the company has no plan to
sell a stake to a strategic partner.
But the sources told Reuters that the company is expected to
launch the sale in the first quarter of next year and is working
with Barclays Plc as an adviser.
A Hong Kong-based Barclays spokesman declined comment.
Thai Life had 15.3 percent of the country's life insurance
market with annualised premium equivalent of 6.2 billion baht
($202 million) as of the end of the second quarter, according to
Thai Life Assurance Association data.
It trails industry leader AIA Group Ltd which had
20.4 percent, while third-ranked Muang Thai Life Assurance Co
Ltd is close behind with 15.1 percent.
Foreign insurers, particularly heavyweights like AIA and
Prudential, are attracted by Southeast Asia, which accounts for
less than 0.25 percent of the world's insurance market,
according to research by Norton Rose.
Thailand is among the most underinsured nations in Southeast
Asia, with only 25 percent of the country's population of 65
million currently owning life insurance.
It has an insurance sales to gross domestic product ratio of
2.7 percent, compared with 3.3 percent for Malaysia and 4.3
percent for Singapore, according to Fitch Ratings.
But it is also seen as one of the fastest growing life
insurance markets in the region.
Fitch estimates Thailand's life insurance industry grew 17.5
percent in the first seven months of 2012 to around $6.9
billion, and adds that the sector is supported by steady premium
growth, robust capitalisation with zero leverage and a
conservative investment mix.
Swiss Re forecasts life insurance premiums in Thailand to
grow 6 percent in 2013, compared with 4.5 percent growth
forecast for the whole of Asia.
Unlisted Thai Life Insurance was established in 1942 when a
group of Thai citizens and high-rankng officials came together
to support the industry after foreign insurers deserted the
country due to the Second World War, according to the company