KUALA LUMPUR: THE Employees Provident Fund (EPF) and Retirement Fund Inc (KWAP) are planning to buy stakes in foreign-owned insurance companies in the country, said senior executives of the two funds.
EPF deputy chief executive officer of investment Datuk Mohamad Nasir Ab Latif told NST Business it was looking at Prudential Assurance Malaysia Bhd and Great Eastern Life Assurance (M) Bhd.
EPF is evaluating the proposal and has yet to make any decision.
“It will involve a lot of negotiations and due diligence. If the price and valuation are right, we will proceed,” he said.
Nasir said it was too early to tell on how much stake EPF planned to buy.
“However, a few entities such as Khazanah Nasional Bhd and KWAP are also eyeing the stake.”
Bank Negara Malaysia has instructed foreign insurers to comply with the foreign ownership rule, which requires them to increase the local shareholding up to 30 per cent.
KWAP chief executive officer Datuk Wan Kamaruzaman Wan Ahmad said it was keen to acquire stakes in foreign-owned insurance companies.
“It depends on the foreign insurers, whether they allow us up to 30 per cent of the shareholding or less.”
He said KWAP was interested in less than 30 per cent of the shareholding.
Kamaruzaman said KWAP would normally hold up to 20 per cent stake in any company.
“We have money. There is no issue in terms of the cash required to purchase the stake.”
Kamaruzaman said investments in insurance companies could yield attractive dividends. On the upside, there was potential of gain upon any listings.
“If the offer is 30 per cent, we will look into it. The bigger the companies, the more cash we have to put in.”
Kamaruzaman said KWAP was expected to allocate RM3 billion to acquire about 20 per cent stake in foreign insurance companies.
Meanwhile, Nasir said EPF would not know whether the foreign-owned insurers would sell the 30 per cent stake to just one entity or several parties.
“It is still early. We really do not know. If the price is right, we will get 30 per cent. But they may not give all to us,” he said, adding that EPF was also investing in insurance companies overseas.
He said EPF needed to see what kind of returns the foreign insurers could generate.
On the amount EPF would set aside for the purchase, Nasir said: “We will not know until we have done a thorough analysis. For example, what are the earnings they can generate and other liabilities as well as long-term growth outlook.
“We need to study all that before coming up with the valuation. Bank Negara will normally give us three to six months to complete an acquisition.”
Armed Forces Fund Board (LTAT) chief executive officer Tan Sri Lodin Wok Kamaruddin said LTAT would not acquire stakes in other foreign-owned insurers.
“We are quite happy with our equity in AXA Affin General Insurance and Axa Affin Life Insurance. Our understanding is that once we own interest substantially in a particular group of foreign companies, we wouldn’t be allowed to own interest in any other foreign insurance companies,” he said.
Lodin said LTAT was required to continue making sure they were profitable.
“Of course, if we have the opportunity to increase our shareholding, we will do so. At the moment, we own 21 per cent of Axa Affin Life, while in Axa Affin General, our shareholding has increased to just below 40 per cent.”
Lodin said LTAT considered its investments in both companies substantial and there was no reason to acquire stakes in other insurance companies.