Khazanah said among suitors for Great Eastern

Business Times Malaysia    By Rupinder Singh     Published: 2010/01/26

It is not clear how big a stake in Great Eastern Life would be up for sale, but it is believed to be up to 30 per cent.

A group of potential suitors, including state-owned investment agency Khazanah Nasional Bhd, is said to have lined up for a stake in Singapore's Great Eastern Life Assurance (Malaysia) Bhd to help realise the insurer's takaful ambition.

Khazanah declined to comment on such talk, which first emerged when industry sources said that one of the conditions for Great Eastern Life to secure a takaful licence from Bank Negara Malaysia was that its Singapore parent had to sell down a portion of its conventional insurance business here to a local party.

Sources also said that Great Eastern was one of the front runners to secure one of two family takaful licences to be issued by Bank Negara soon.

Great Eastern Life is a wholly-owned subsidiary of Great Eastern Holdings and operates in Malaysia. However, it does not have a takaful licence as yet.

It was not clear how big a stake in Great Eastern Life would be up for sale, but it was believed to be up to 30 per cent.

A source in Great Eastern said that the insurer had been directed to look at several shareholding options.

"We were asked to look for a new shareholder. We are evaluating several options now," he said.

He said that if the company failed to find a shareholder, it might consider an initial public offering after obtaining a takaful licence.

"Another option on the cards could be something that has not been done in the country before," the source said, without elaborating.

Should Khazanah buy the Great Eastern Life stake, it would not be its first investment in a takaful or insurance venture.

Khazanah is the joint largest investor in the Singapore- based Asia Capital Reinsurance (ACR) and ACR ReTakaful Holdings Ltd.

In 2007, Khazanah and 3i, a leading private equity and venture capital company in the world, each committed US$200 million (RM682 million) for a 32 per cent stake in ACR.

The following year, Khazanah together with ACR and Dubai Banking Group (DBG) formed the world's largest retakaful group, ACR ReTakaful, in which Khazanah and DBG each hold 40 per cent interest.

ACR owns the remaining 20 per cent and, by virtue of Khazanah's 32 per cent stake in ACR, has the largest effective shareholding in ACR ReTakaful.

Great Eastern's top executives have voiced their takaful intentions loud and clear on many occasions.

It recently roped in former Prudential BSN Takaful Bhd chief executive officer Mohamad Salihuddin Ahmad to head its future Islamic insurance operations.

The group is believed to have put in place a project team in Singapore to spearhead the takaful operations.

Last year, Great Eastern Malaysia director and chief executive officer Koh Yaw Hui said the company would use its strong channels and bancassurance business, through holding company Oversea-Chinese Banking Corp Ltd (OCBC), as a platform to launch takaful products if it succeeded in securing the licence.