Goldman Sachs – AIA, China Strategic Said Among Bidders for BEA Life Insurer
Hong Kong insurance giant AIA Group Ltd. and China Strategic Holdings Ltd., an investment firm backed by billionaire Henry Cheng, are among final bidders for Bank of East Asia Ltd.’s life insurance unit, according to people with knowledge of the matter.
The companies have submitted binding bids for the asset, proceeding into the final stage of negotiations, the people said, asking not to be identified because the deliberations are private. BEA, which counts activist investor Paul Singer’s Elliott Management Corp. as a shareholder, could raise about $500 million to $600 million from a potential transaction, people familiar with the matter have said.
An announcement on the sale outcome could come as early as this month, the people said. Other bidders could emerge and talks could still be delayed or even fall apart, the people said. Representatives for AIA and BEA declined to comment, while a representative for China Strategic didn’t immediately respond to requests for comment.
Shares in China Strategic extended gains after the Bloomberg News report and closed 15.6% higher in Hong Kong. Shares in BEA climbed 2.1%, while AIA rose 2.6%.
BEA in September started a process of selling its life insurance unit in a bid to boost profitability and lift its shares. As part of the deal, the Hong Kong-listed lender is also seeking to enter into a long-term exclusive distribution agreement that will provide an ongoing source of revenue as a distributor of insurance products through its platform. Goldman Sachs Group Inc. has been helping BEA on the strategic review and potential sale of the asset.
BEA Life Ltd., the bank’s wholly-owned life insurance arm, had about HK$25.4 billion ($3.3 billion) in assets as of the end of June, according to BEA’s latest financial report. BEA’s commission income from sales of BEA Life products increased by about 49% in the first half of last year despite a drop in new premium income. BEA is scheduled to report its 2020 full-year earnings on Feb. 24.
Founded in 1919, AIA is based in Hong Kong and has a presence in 18 markets. Its third-quarter new business value fell 28% to $706 million from a year earlier amid the impact from the coronavirus pandemic. It has a market value of about $150 billion.
Listed in Hong Kong, China Strategic’s operations range from investing in securities and loan financing to trading metal minerals and electronics components as well as securities brokerage, according to its website. New World Development Co. Chairman Henry Cheng holds about a 17% stake in the company, according to data compiled by Bloomberg. In 2010, China Strategic scrapped a joint offer for a majority stake in Nan Shan Life Insurance Co., held by American International Group Inc., following a formal rejection notice from the Taiwan government.
(Updates with more details from seventh paragraph.)