British insurer Prudential’s wholly owned Malaysian unit has entered talks with KWAP, the country’s second-largest pension fund, for the sale of a 30% stake in the insurer.
The stake is valued at US$435 million and Prudential is reportedly in a hurry to sell it in order to meet the Malaysian government’s newly enforced foreign ownership limits.
However, talks between Prudential Assurance Malaysia Bhd and KWAP are not exclusive, and more concrete details could emerge within the month, sources told Reuters.
Malaysia’s central bank began enforcing a 70% limit on foreign ownership of insurers in order to promote domestic participation in the insurance industry. Aside from Prudential, several other foreign-owned firms in Malaysia such as Great Eastern (Singapore), Tokio Marine (Japan), and Zurich Insurance (Switzerland), have begun executing plans to divest before the deadline in June.
“Some insurers are hopeful that BNM (Bank Negara Malaysia) might extend the deadline but they realise that they still need to have a tentative deal in place,” a person familiar with the talks told Reuters.
Foreign insurers have been attracted to Malaysia and other Southeast Asian economies in recent years, due to strong economic growth, expanding middle classes, and low insurance penetration.