Malaysia's second biggest pension fund Kumpulan Wang Persaraan (KWAP) has narrowed down its investment options among foreign-owned insurance companies which have to reduce their stakes in their Malaysian businesses in order to comply with foreign ownership limits.
KWAP Chief Executive Wan Kamaruzaman Wan Ahmad said: "We are at the point of appointing an investment bank as our advisor... (The companies are) the big ones, Great Eastern, Prudential and AIA," he said.
KWAP could also partner with other institutional investors as the percentage of shares to be disposed of by the insurance companies is relatively big.
"It (stake acquisition) depends on valuation. It might not be us alone actually... We might also be looking at partnering with institutional investors—maybe not just one; maybe two or three, but it depends, because the stake is quite sizeable and there is so many around.
"Because of that reason, we might not necessarily buy one ourselves; but we might buy smaller stakes (in these companies), let’s say 10%, 10%, 10% (respectively, in these companies)," he told Bernama News Agency.
KWAP will make the final decision after the vetting of the insurers is completed. The results of the selection are expected to released by year-end, he added.
Bank Negara Malaysia has instructed foreign insurers, namely Tokio Marine Holdings, AIA, Great Eastern Holdings and Prudential to comply with the foreign ownership rule which requires overseas insurers to increase local shareholdings to at least 30%.
The overseas firms have until June 2018 to comply with the rule. They must complete negotiations for the divestment with targeted parties before the end of the year, and should those talks fail to materialise, they must list their businesses on the local stock exchange.