Malaysian SWF in $600m CIMB Aviva deal

Khazanah Nasional has co-invested in the Malaysia-based life insurance firm with Canadian strategic Sun Life Financial.

Sovereign wealth fund Khazanah Nasional and Sun Life Financial have together acquired a 98 percent stake in Malaysian life insurance company CIMB Aviva Assurance Berhad and CIMB Aviva Takaful Berhad, an Islamic insurance operator, according to a company statement. 

The pair are each paying MYR 900 million (€224 million; $299 million) for respective 49 percent stakes in the CIMB Bank subsidiaries, equaling a total deal value of MYR 1.8 billion, the statement said. 

The transaction is now subject to regulatory approvals in Canada and Malaysia and is expected to close in the first half of 2013. Once closed, it provides Sun Life with an exclusive right to distribute insurance products, including Islamic insurance products, called takaful, through CIMB Bank’s network across Malaysia. Currently CIMB has 312 branches across the country.

“This is an important investment for Khazanah. It marks not just an opportunity to invest into an asset in a growth sector, but also brings together a unique commercial partnership among three strong parties in their respective areas,” Tan Sri Dato’ Azman Mokhtar, managing director of Khazanah, said in a statement.  

“This transaction is perfectly aligned with our strategy for expanding our footprint in Asia,” added Sun Life Financial Asia president Kevin Strain in the statement. “We are investing in a country with one of the most developed economies in the ASEAN region and a growing middle class.”

Khazanah Nasional is the investment arm of the Government of Malaysia and one of Asia’s more low profile LPs. The firm currently has MYR 108 billion in assets under management, according to Private Equity International’s data division, and first invested in private equity in 1994 making co-, direct and secondary investments in the Asia Pacific region.