HK insurer to buy Aviva shares
H.D.H Senewiratne
All stakes belonging to the British insurer Aviva in NDB – Aviva
Insurance Plc will sell to a Hong Kong based insurance giant,
theAmerican International Assurance (AIA) and exit the market, market
sources said.
According to market sources, they have reached the final stages of
negotiations for the purchase of 51% of the stake held by Aviva and bids
have been approved. Therefore, the company had signed a Memorandum of
Understanding (MoU) to go ahead with the transaction.
When the Daily News Business contacted Aviva Insurance, they declined
to comment on it.
The NDB Bank through its subsidiary, the Capital Development and
Investment Company (CDIC), controls a stake of 41.6 percent in Aviva NDB
Finance Lanka (ANFL), while Aviva Asia Holdings owns the majority stake
of 58.4 percent.
ANFL in turn, has a stake of 87.3 percent of Aviva NDB Insurance,
while the NDB Bank independently has another stake of 5 percent. The
company’s market value had been around Rs. 8.4 billion which would give
Aviva’s a 51 percent stake, a valuation of Rs. 4.2 billion.
When bids had been called in July, seven parties had collected offer
documents from Morgan Stanley in Hong Kong who was the investment
bankers appointed to handle the deal, insurance sources said. Aviva NDB
Insurance which is believed to be the second largest life insurer in Sri
Lanka, generated Rs 12.8 million in revenue last year, earning a
post-tax profit of Rs 691.6 million. With this development value of a
share, which is likely to go up to a Rs 300 level at present, it is
selling at Rs 240. AIA is a specialised insurance company mainly
operating in Asian markets. With these developments, the share market
would increase further, Lanka Securities (Pvt) Limited Research Analyst
said. At the end, NDB directly and indirectly has about 41 percent of
Aviva NDB Insurance, while Aviva Asia Holdings has about 51 percent. Now
the question arises in the market circles whether the NDB will continue
to hold their stakes or whether they would sell off their stakes as well
to the buyer of the Aviva share.
It was also reported earlier, that the AIA Group, Prudential Plc and
Manulife Financial Corp, were bidders for Aviva’s stake in the Sri
Lankan joint venture. However, some news sources said that a few
local parties such as top business man Harry Jayewardene and the
Janashakthi Group were also interested in it. But This is as part of
Aviva, Britain’s second largest insurer’s announcement earlier to sell
underperforming businesses globally, partly to raise money to protect
against its euro zone exposure which is bigger than that of its rivals.
Reuters news wire reported earlier. |