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Aviva sold its Singapore operation to local rival Singlife, as new CEO Amanda Blanc moves quickly to shrink the UK-based insurer’s portfolio.
Blanc became CEO of Aviva in July and said last month she would focus the business in the UK, Ireland and Canada. She said the company would “withdraw capital” from other places where it could not meet its objectives.
On Friday, Aviva said it would sell its Singapore business to local rival Singlife in a deal that values the unit at 1.6 billion pounds. The UK insurer will retain a 25 percent stake in the expanded business.
Singlife is owned by private equity firm TPG, Japanese insurer Sumitomo Life and IPGL, the investment vehicle of UK city stalwart Michael Spencer.
Blanc said the deal was “an important first step in our new strategy to focus more of Aviva’s portfolio.”
He added that the company was “looking to take decisive action on our portfolio with the goal of further enhancing long-term value for our shareholders.”
The company’s share price rose 5 percent on the news of the sale before declining slightly to end 2.5 percent higher at 295.98 pence on Friday.
Philip Kett, an analyst at Jefferies, said: “By selling Singapore for £ 1.6 billion, Aviva will realize a value equivalent to 15% of the market capitalization with a loss of only 5% of the profit.”
He added that the deal was “a clear delivery from the new CEO, Amanda Blanc, in her promise of decisive action.”
Deletions are unlikely to stop there. Aviva’s French business could also attract the attention of potential suitors. Analysts at Citigroup value the unit at 2.8 billion pounds.
Alan Devlin, an analyst at Shore Capital, noted that the company’s Italian joint ventures could be sold at the prices set out in their contracts, while the 40 percent stake in AvivaSA in Turkey, which is a publicly traded company, could sell.
“We expect today’s announcement to be the first of several announcements,” Devlin said.
Blanc’s predecessor, Maurice Tulloch, tried to sell the Singapore business last year as part of a broader strategy to sell assets in Asia. However, he ended up keeping the business after Aviva’s bids were too low.
After the phase-out, which will be completed in January next year, Aviva will continue to have a wholly owned business in Vietnam and joint ventures in China and India.
