FWD Group, backed by Hong Kong billionaire Richard Li, has revived talks about a potential acquisition of the life insurance operation Siam Commercial Bank after a two-year hiatus.
SCB had reached a preliminary pact with FWD on a potential life-insurance partnership, the bank told the Stock Exchange of Thailand on Friday, confirming an earlier Bloomberg News report. A deal would see FWD acquire SCB Life Assurance and sign a long-term distribution agreement with the bank, according to the filing.
FWD and SCB have entered into exclusive negotiations to finalise terms of a transaction, the filing shows. The business could be valued at around $3 billion, people with knowledge of the matter said. A deal at that price would be the biggest-ever acquisition of an insurer in Southeast Asia, according to data compiled by Bloomberg.
“Thailand is attractive to most insurers, especially foreign ones, because the proportion of insurance policy holders are still low compared with the entire population,” said Adisorn Mungparnchon, an analyst at Phillip Securities. “SCB’s bank branch network will also be a key platform for FWD’s sales.”
The final price tag would depend on the outcome of due diligence, the people said, asking not to be identified because the information is private. No binding agreements have been reached, and there is no certainty the discussions will result in a deal, according to Friday’s filing.
SCB shares jumped 3% on Friday afternoon on the SET to close at 135 baht, in trade worth 2.4 billion baht.
SCB had unsuccessfully explored a sale of its life insurance business back in 2017 at a mooted valuation of around $3 billion. It held talks with potential buyers including FWD, AIA Group, Manulife and Prudential Plc, though discussions ultimately fell apart over price, people with knowledge of the matter said at the time.
After the previous talks with SCB fell apart, FWD renewed a distribution deal with TMB Bank. An acquisition of SCB Life Assurance would help FWD expand in a country where it already has more than 900,000 customers.
FWD, which manages more than $28 billion of assets and is backed by Swiss Re, has 3 million customers spread across eight Asian markets, according to its website. Li, the son of Hong Kong’s richest man, formed the company after spending $2.1 billion to buy the insurance and pension units of the Dutch bank ING in Hong Kong, Macau and Thailand in 2013.
FWD has been acquisitive as it expands across Asia. It agreed in October to buy control of Commonwealth Bank of Australia’s Indonesian life insurance arm.
In 2017, it bought AIA’s Japanese life unit, after earlier making acquisitions in Singapore and Vietnam. It has also hired former Deutsche Bank dealmaker Tan Boon-Kee as senior adviser for mergers and acquisitions.