Malaysia's Malayan Banking has said that its joint-venture firm will pay $224 million in cash for a controlling 74.2% stake in MNI Holdings, one of the country's largest local insurance companies.

The Malaysian lender said in a statement that its insurance unit, Mayban Fortis Holdings Bhd, would buy 210.06 million MNI shares from Malaysia’s largest fund manager, Permodalan Nasional Bhd.

Maybank owns 70% of Mayban Fortis and Benelux financial services group Fortis owns the remaining 30%.

Maybank said that the premium reflected the future business growth and prospects of MNI and added that the acquisition would fuel a quantum leap for Mayban Fortis’ business.

In a company statement, Maybank chief executive Amirsham A Aziz said, We see the insurance sector as a growth area. Mr Aziz added that the deal is a major step in Maybank’s goal of becoming a market leader in insurance and takaful (Islamic insurance) business in Malaysia.

The purchase will be funded through its existing cash reserves and further injection of funds by Maybank and Fortis. While the estimated total value of the purchase is E245 million, Fortis said the acquisition would have no material impact on Fortis’ profit and solvency position.

The acquisition is still subject to completion of due diligence and regulatory approval, Fortis said; and that following completion of the proposed acquisition, Mayban Fortis will be required to undertake an unconditional mandatory general offer (MGO) for the remaining shares it does not own in MNI under Malaysian takeover rules.