Malaysia Life Parring Down

Overseas insurers, including Prudential Plc, are pursuing plans to sell stakes in their Malaysian units, in deals that could raise at least a combined US$2 billion (RM8.6 billion) and help them comply with foreign ownership limits, people with knowledge of the matter said.

Prudential has asked banks to pitch for a role advising on a domestic initial public offering (IPO) of its Malaysian unit, an option it is considering alongside a potential stake sale to an investor, according to the people.

Singapore’s Great Eastern Holdings Ltd is also exploring cutting its local holding to 70% through a sale or IPO, the people said, asking not to be identified because the details are private.

A sale of a 30% stake in Great Eastern Life Assurance (Malaysia) Bhd could raise about RM5 billion (US$1.2 billion), while the disposal of a similar stake in Prudential Malaysia Assurance Bhd would fetch at least RM3 billion, the people said.

Japan’s Tokio Marine Holdings Inc has appointed a bank to advise on options for cutting its stake in its local unit, which could raise around RM1 billion.

Foreign insurers have until the end of June 2018 to reduce their holdings in local firms to 70% at most, one person said.

The country’s central bank has been weighing tougher enforcement of a cap on foreign ownership as it seeks to boost local participation in the industry, people familiar with the matter said in April.

Representatives of Great Eastern and Prudential declined to comment, while a representative of Tokio Marine didn’t immediately answer emailed questions.

The central bank will continue to engage with the insurers on their plans, Bank Negara Malaysia said in a statement, declining to comment further.

Any companies that opt to pursue IPOs would join Manulife Holdings Bhd and Allianz Malaysia Bhd, the only local insurers with majority foreign ownership that are traded on the Kuala Lumpur exchange.

The deals would help extend a rebound in Malaysian first-time share sales, which have raised US$1.7 billion (RM7.3 billion) this year, up from US$255 million (RM1.1 billion) during the same period in 2016.