SINGAPORE: Malaysia’s biggest bank, Malayan Banking Bhd, is preparing to spin off and list its Etiqa Insurance arm on the local stock exchange, according to sources with knowledge of the matter.
Etiqa, which operates in Malaysia, Singapore, the Philippines and Indonesia, is estimated to be worth at least US$1 billion (RM3.88 billion), two sources said.
It would have a bigger market value than insurance peer Syarikat Takaful Malaysia Bhd, which is valued at about US$700 million.
Maybank’s insurance business is called Etiqa International Holdings Sdn Bhd.
It owns 69% of Maybank Ageas Holdings Bhd while Ageas, the Brussels-based international insurer, holds the remainder.
Maybank Ageas owns various Etiqa units.
A Maybank spokesman said the bank “constantly evaluates value creation opportunities which can benefit stakeholders” but declined to comment on market talk about a spin-off.
Ageas also declined to comment while Etiqa had no response to queries by Reuters.
As part of the transaction, Maybank’s investors are expected to receive shares in the insurance company in proportion to their existing holding in the bank, the sources said, adding that no new money is expected to be raised in the listing.
However, they said the exact structure of the listing had not been finalised and the terms could change.
Jolynn Kek, investment manager at Aberdeen Asset Management Sdn Bhd, who holds shares in Maybank, said the listing would bring new attention to the insurance sector.
“There isn’t much liquidity among existing listed insurers.
“The Etiqa franchise is quite strong, so it’s definitely a big attraction, especially with Maybank as a bancassurance partner,” she said.
“If the stake is fully spun off, it would be an advantage to Maybank as it can reduce the capital requirements.”
Maybank, Etiqa and Ageas are working with investment banks on the spin-off, said the sources, who declined to be identified as news of the listing is not public.
“The listing will help Maybank unlock value and get it higher valuations,” said one source, adding that Maybank aims to list the insurance business later this year.
The planned listing comes as Malaysian state-linked fund management firm Permodalan Nasional Bhd, the biggest shareholder in Maybank, is seeking to restructure its holding companies in order to boost returns.
Last year, Sime Darby Bhd, majority owned by Permodalan Nasional, spun off its plantation and property units and listed them on the local market.
Etiqa, which provides life and general insurance as well as family and general takaful, or Islamic insurance, products, reported record revenue of RM6.2 billion ringgit in 2017.
Profit before tax rose 18.5% to RM1 billion last year.
In March, Etiqa said it maintained its top position in Malaysia’s general insurance and general takaful segment with an 11.8% market share.
It was ranked fourth in the life and family segment, with an 8.9% market share.