Johannesburg - South African financial services company Sanlam [JSE:SLM] has concluded an agreement to acquire 49% of Malaysian short term insurer Pacific and Orient Insurance‚ it said on Monday.
This followed recent approval by Bank Negara Malaysia and the Malaysian Minister of Finance to continue with the transaction.
The deal is subject to certain conditions‚ including approval by the shareholders of POI's holding company Pacific & Orient (P&O).
The purchase consideration for the stake is MYR270m (Malaysian Ringgit) - or approximately R760m.
“The transaction is in line with Sanlam's stated strategy to pursue profitable growth opportunities in selected emerging markets and represents Sanlam's first step into the important South East Asia region‚” it said.
Established in 1972‚ POI is wholly owned by P&O‚ which is listed on main board of the Malaysian stock exchange. POI´s business is predominantly focused on motorcycle insurance and the company has an approximate 40% market share in this segment‚ making it the largest motorcycle insurer in Malaysia.
The country relies heavily on motorcycles as a mode of transport with approximately one motorcycle for every three people. New motorcycles sales are projected to grow by 10% per annum until 2015.
“This transaction is our first foray into the South East Asia region. We believe that this transaction will provide us with a platform to gain an understanding of the region and a footprint on which to expand‚” said Sanlam Emerging Markets Chief Executive Heinie Werth.
“POI is an established entity with a robust business model and a strong market position. Motorcycle dealers deem it important to have a good insurance provider and it is compulsory for motorcycles to have insurance. This is supported by an extensive distribution network. We are confident that the company offers us a relatively low risk entry into the market and a platform for growth."
POI's current management team will continue managing the business with Sanlam seconding staff to POI over time.
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