Singlife and Aviva Singapore have a combined business value of $2.34bn
Aviva has agreed to sell its majority stake in its Singaporean subsidiary to a consortium led by Singapore Life (Singlife) for SGD2.7bn ($1.98bn) to pave way for the creation of an enlarged insurance firm in Singapore.
The transaction will lead to the subsequent merger between Aviva Singapore and Singlife. The resulting enlarged entity to be named initially as Aviva Singlife is valued at SGD3.2bn ($2.34bn), said Singlife.
The other parties in the acquiring consortium are TPG, Sumitomo Life Insurance, and other existing Singlife’s shareholders.
Currently, Aviva Singapore insures nearly 1.5 million customers, and has SGD11.8bn ($8.64bn) of assets under management. Singlife, on the other hand, is a mobile savings and protection company based in Singapore.
The merger is said to bring together the best of the digital capabilities of the Singaporean company and the product history and trusted advisory services of the Aviva subsidiary.
Stakeholders of the combined firm created by the merger between Aviva Singapore and Singlife
In the combined entity, Aviva will have a stake of 25% while Sumitomo Life Insurance, the Singaporean firm’s existing shareholder, will hold 20% stake.
Aflac Ventures, Aberdeen Asset Management, IPGL, and minority shareholders of the Singaporean firm will have a combined stake of 20% in the enlarged insurance firm. The remaining stake of 35% will be held by TPG, a global alternative asset firm.
Singlife chairman Ray Ferguson said: “By joining forces with Aviva Singapore, we are creating a homegrown regional brand that will go far beyond insurance and deliver on these ambitions by creating innovative financial products with intuitive technology and independent advice.”
Upon completion, Aviva will be paid SGD2bn ($1.46bn) in cash and marketable securities, SGD250m ($183m) in vendor finance notes, apart from the equity shareholding in the enlarged firm.
Aviva said that the proceeds from the sale of stake in its subsidiary will be used for further strengthening its central liquidity and will be considered as part of its larger objectives of capital management and debt reduction.
Aviva group CEO Amanda Blanc said: “The sale of Aviva Singapore is a significant first step in our new strategy to bring greater focus to Aviva’s portfolio. We have achieved excellent upfront value for shareholders but have also retained an investment in a leading Singapore life business with attractive long-term growth potential.”
The transaction is expected to close by January 2021 once it gets regulatory approval and meets other customary closing conditions.