Aviva sells stake in Malaysian joint venture
Aviva has reached agreement to sell its 49 per cent interest in CIMB Aviva Assurance Berhad and CIMB Aviva Takaful Berhad to Sun Life Assurance Company of Canada, a subsidiary of Sun Life Financial, for a consideration of GBP152m payable in cash.
CIMB-Aviva is a joint venture between Aviva International Holdings Limited and CIG Berhad, which is ultimately owned by CIMB Group Holdings Berhad (CIMB), one of Malaysia’s leading financial groups and parent of CIMB Bank, one of Malaysia’s largest banks.
The transaction represents further progress in narrowing the group's focus on businesses and markets where Aviva enjoys leadership positions and is able to generate attractive returns with a high probability of success. The transaction will increase Aviva's pro forma economic capital surplus coverage ratio by approximately two per cent to 171 per cent (FY11: 130 per cent). The proposed transaction values CIMB-Aviva at 2.4x 1H 2012 embedded value.
CIMB-Aviva operates one of Malaysia’s leading bancassurance platforms offering conventional life, Takaful life and Takaful general insurance products through its exclusive distribution agreement with CIMB Bank. Aviva has had a 49 per cent shareholding in CIMB-Aviva since forming the joint venture with CIMB in 2007.
In a related transaction, CIMB has agreed to sell the majority of its interest in CIMB-Aviva to Khazanah Nasional Berhad, the Government of Malaysia’s strategic investment fund. CIMB will become a minority shareholder and continue its distribution relationship with the company.
The agreement reached by the parties, and the sale, are subject to regulatory approval and execution of appropriate legal documentation. Upon receipt of the aforesaid regulatory approval, the parties will work to close the proposed transaction during the first half 2013.
Mark Wilson (pictured), chief executive officer of Aviva plc, says: “This is a good deal at an attractive valuation. The sale realises a strong return for our shareholders and is a tangible step in our journey towards a more focused, higher performing organisation. Together with the recent disposal of our remaining stake in Delta Lloyd, this has been a satisfactory start to the year.”
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