The deal, which is conditionally expected to be completed by the end of October, is seen as potentially giving Aviva an instantly-enlarged presence in Singapore – a booming retail insurance market – while enabling Centrepoint to shed a non-core operation.
It is also seen as a sign that businesses are beginning to anticipate changes that are likely to occur in the marketplace once the Monetary Authority of Singapore completes its so-called Financial Advisory Industry Review, which is aimed at boosting the standards of investment advice on offer in the city/state.
PIAS is said to employ more than 330 licensed financial advisers in Singapore, and to look after almost 50,000 clients.
News of the deal came in an announcement to the Australian Securities Exchange by Centrepoint Alliance Ltd, which is selling its stake in Professional Investment Holdings, PIAS’s Australian parent, through its Fifth Floor Pte Ltd subsidiary.
Centrepoint acquired PIH, which operates a network of financial advice firms throughout the Australasian region, in December 2010.At that time, Aviva already held a 19.4% stake in the company, according to press reports of that deal.
The value of the Aviva Asia bid was not immediately clear, since it is complex and involves share swaps, cash, and Centrepoint shares of unspecified value.
MAS approval required
The sale is subject to a number of conditions, including the approval of Centrepoint Alliance’s shareholders and that of the Monetary Authority of Singapore, according to the Centrepoint Alliance announcement.
David Bellingham, chief executive of PIAS, confirmed that a conditional sale of the company had been agreed, but declined to comment, citing the deal’s conditional nature.
Explaining the reasons Centrepoint Alliance had decided to sell its interest in PIAS, Centrepoint managing director Tony Robinson said that although it was among Singapore’s most successful advisory businesses, “it is difficult for us to contribute to its management and meet its investment needs going forward”.
“We believe the transaction with Aviva gives PIAS a shareholder who will help it achieve its growth aspirations, and provides CAF shareholders with an opportunity to remove a significant CAF shareholding from the market and receive reasonable consideration for the business.”
Jewel in Aviva’s crown
For Aviva, Singapore is already a jewel in its corporate crown, as reported here on Friday.
The UK-based insurer reported a 27% increase in life and pension sales in its Singapore business in the first half of 2011, which it noted had been driven by a "robust bancassurance sales performance with the Development Bank of Singapore (DBS Bank)". This was a stark contrast to the company’s overall performance, which included an after-tax loss of £681m, down from a profit realised during the same period in 2011 of £465m.
22% rise in new business sales
As reported, Singapore’s life insurance industry saw a 22% increase in sales last year, as measured by weighted new business premiums.
Data from the Life Insurance Association Singapore showed that the industry last year posted S$2,007m ($1,585m) in new business premiums, compared with S$1,651m in 2010.
Sales slowed slightly in the first half of 2012, but still generated an 11% gain over the same six month period in 2011, data on the LIAS website reveals.