EPF, PNB potential buyers as foreign insurance firms try to beat BNM deadline

Report says 30% stake in Malaysian subsidiaries has a potential value of US$3 billion.

PETALING JAYA: Major foreign insurance firms are preparing to sell their stakes in their Malaysian operations ahead of a Bank Negara Malaysia (BNM) deadline requiring a 30% local ownership, The Wall Street Journal reports.

The financial daily, quoting investment bankers, said the buyers could include the Employees Provident Fund (EPF) and state-owned investor Permodalan Nasional.

An EPF spokesman said the pension fund would “go through the EPF investment decision framework” to ensure that any plan to buy stakes in the insurance firms would fit the fund’s “risk-return profile”, according to the paper.

Among the companies mentioned by the WSJ report are Prudential and Tokio Marine, who are trying to sell close to a third of the shares in their Malaysian subsidiaries, potentially raising US$3 billion in total over the next nine months.

A source quoted by WSJ said the sale of 30% of stakes in Prudential, Malaysia’s third-largest insurance company, could fetch some US$1 billion, as could Great Eastern, one of the oldest insurance firms operating in Malaysia.

Last June, BNM gave insurers until June 2018 to comply with its requirement in 2009 that foreign ownership should not exceed 70% in a move to increase local participation in the industry. -FMT