Prudential, the UK-based insurer under pressure from US activist investor Third Point, said on Thursday it would acquire FWD Group’s Thailand bancassurance partnership for Bt24.5bn ($754m).
The deal will see Prudential’s Thai unit buy the right to sell life insurance products in the south-east Asian country through Bangkok-based TMB Bank.
Prudential will have exclusive rights to sell life insurance products through the network of TMB, which is in the process of merging with Thailand’s Thanachart Bank, for an initial 15 years from the beginning of 2021.
The two banks are set to become Thailand’s sixth-largest by deposits and fourth-largest by the number of branches after the merger, which is due to be completed next year.
Prudential, which has been active in Thailand for more than 24 years and claims more than 1.6m customers, said it would be paying for the Thai partnership in two instalments, with Bt12bn due in April 2020 and the remainder on January 1, 2021.
Its sale of the partnership to Prudential may help to ease potential antitrust challenges for FWD at a time when the insurance group, controlled by Hong Kong billionaire Richard Li, son of the tycoon Li Ka-shing, has been expanding aggressively in the life business across Asia.
FWD bought the life insurance business of Siam Commercial Bank, one of Thailand’s biggest by assets, for $3bn in September in the biggest-ever insurance takeover in south-east Asia.
The deal comes at a time when Prudential faces a challenge from activist hedge fund Third Point. The fund, headed by Dan Loeb, in February unveiled a 5 per cent stake in the insurer and has argued that Jackson, its US business, should be separated from the group’s fast-growing Asian business.
Nic Nicandrou, Prudential’s Asia chief executive, said the new partnership with TMB would combine the bank’s local knowledge with its expertise in life, health, and savings businesses and give Thais access to the group’s “fast growing and expanding digital platform”.