Bank Danamon fields interest in insurance unit

by BLOOMBERG

JAKARTAPT Bank Danamon Indonesia, the nation’s fifth-largest lender by market value, is fielding interest from foreign suitors seeking a stake in its insurance subsidiary, people familiar with the matter said.

Jakarta-based Danamon is working with an advisor as it weighs options for its holding in PT Asuransi Adira Dinamika, according to the people, who asked not to be identified because the information is private. The business has drawn interest from European as well as Japanese insurers, one of the people said.

Deliberations about a potential sale are at an early stage, and no final decisions have been made, said the people. A transaction could also include a so-called bancassurance agreement, which would allow a partner to sell products through Danamon’s branch network, one of the people said.

Foreign financial firms have been drawn to Indonesia’s economic growth and the size of its population, which is the world’s fourth-largest. Mitsubishi UFJ Financial Group Inc agreed in December to buy a US$1.2 billion (RM4.73 billion) stake in Danamon, in the first step to take majority control of the lender, testing rules that limit foreign ownership of local lenders.

A spokeswoman for Danamon declined to comment in a mobilephone text message.

Any deal would add to the US$2.3 billion of acquisitions targeting the South-East Asian insurance industry over the past three years, according to data compiled by Bloomberg. Fairfax Financial Holdings Ltd bought a majority stake in a non-life insurance arm of Indonesia’s PT Paninvest in 2016. Toronto-based Fairfax also sold a Singapore property and casualty insurer to MS&AD Insurance Group Holdings Inc last year.

More deals are coming. Malaysia’s biggest pension fund has held talks with overseas insurers about potentially buying stakes in their local units, Datuk Shahril Ridza Ridzuan, CEO of the Employees Provident Fund, said in October.

Prudential plc and Japan’s Tokio Marine Holdings Inc are among foreign firms planning to reduce holdings in Malaysia to comply with ownership limits, people familiar with the matter said in July. — Bloomberg