URL https://www.reuters.com/article/us-cba-insurance-indonesia/prudential-sun-life-among-bidders-for-cbas-indonesia-insurance-business-sources-idUSKCN1M80QN

DATE/ AUTHOR 2018-09-28 07:52:33+00:00	AUTHORS: Sumeet Chatterjee, Min Read

H Prudential, Sun Life among bidders for CBA's Indonesia insurance business: sources

S1 HONG KONG (Reuters) - At least five insurers, including Britain’s Prudential (PRU.L) and Canada’s Sun Life (SLF.TO), have bid for Commonwealth Bank of Australia’s (CBA) (CBA.AX) majority stake in an Indonesian insurance venture, people with knowledge of the process said.

S2 FILE PHOTO: A man walks past a branch of the Commonwealth Bank of Australia in central Sydney, Australia, February 7, 2018.
S3 REUTERS/Daniel Munoz

S4 The stake sale, which could value the venture at between $250 million and $300 million, has also received second-round bids from insurer FWD Group, Singapore-listed Great Eastern Holdings (GELA.SI), and Indonesia’s Sequis Life, three people said.

S5 Australia’s biggest lender is selling its 80 percent stake in PT Commonwealth Life, which has a presence in 20 Indonesian cities with more than 500,000 individual and group customers, Reuters reported in January.

S6 The interest in PT Commonwealth Life is the latest case of foreign insurers wanting to expand their life business in Southeast Asia, a region of more than 600 million people.

S7 In March, CBA confirmed that it was undertaking a strategic review of its Indonesian life insurance business, and that it has engaged external advisers for guidance on a possible sale of the venture.

S8 The second-round bids were submitted last week, the people said, adding potential buyers are likely to be further short-listed within the next few weeks before a decision is made by CBA.

S9 Representatives of CBA, FWD, Great Eastern, Prudential, and Sun Life declined to comment.
S10 Sequis said it could not comment now as it was “bound by NDA”, or non-disclosure agreement.

S11 The people declined to be named as they were not allowed to talk to the media about the deal process.

S12 The Australian lender has been selling some of its businesses over the past year after suffering a string of scandals including rate-rigging charges, breaches of anti-money laundering laws, and fees charged to dead clients.

S13 CBA sold its insurance business in Australia and New Zealand to AIA Group (1299.HK) for $3.1 billion last year.
S14 It also said this year its loss-making digital banking unit in South Africa was being sold for an undisclosed sum.

S15 The Indonesian stake sale, if completed, will also be another instance of Asian banks exiting the insurance sector to free up capital and focus on their core banking businesses amid tougher regulatory capital buffer requirements.

S16 GROWING MARKET

S17 Asia is a battleground for foreign insurers including Aviva (AV.L), Prudential and Sun Life, attracted by the region’s lower insurance penetration levels and faster growth rates for insurance premiums.

S18 The people said the foreign insurers competing for CBA’s stake in the Indonesian venture were looking to bolster their presence in Southeast Asia, which has seen a handful of M&A deals in the last couple of years in the insurance sector.

S19 Swiss group Zurich Insurance (ZURN.S) said on Thursday it was acquiring an 80 percent stake in Indonesia’s Adira Insurance from PT Bank Danamon Indonesia (BDMN.JK) and a minority investor for at least $414 million.

S20 FWD, owned by Hong Kong billionaire tycoon Richard Li, has agreed to buy HSBC Holdings’ (HSBA.L) stake in a Malaysian insurance joint venture as part of a plan to expand its presence in Asia, sources told Reuters last month.

S21 Sun Life, which operates in seven Asian markets including China, Hong Kong, India, the Philippines and Malaysia, has in recent years made a series of deals in the region to acquire businesses or raise its ownership in several of those markets.

S22 CBA raised its holding in Commonwealth Life to 80 percent in 2007 in what was then a 50:50 joint venture.
S23 The remaining 20 percent is owned by an Indonesian firm, PT Gala Arta Jaya, according to the insurer’s website.

S24 Besides the insurance joint venture, CBA also has a retail and business banking presence in Indonesia.

