U.K.'s Aviva Looks to Sell Friends Provident International for Up to $750 Million

By Kane Wu and Julie Steinberg 

U.K.-based insurer Aviva PLC is looking to sell Friends Provident International Ltd., its unit that serves high-net-worth clients in Asia and the Middle East, in a deal that could fetch up to $750 million, according to people familiar with the situation.

Aviva's sale of Friends Provident International comes less than two years after it bought the business in April 2015, as part of a GBP5.6 billion ($8.8 billion) deal to acquire Friends Life Group Ltd., which at the time created the U.K's largest insurance, savings and asset-management company.

Based in the Isle of Man, a self-governing island situated between the U.K. and Ireland that many consider a tax haven, Friends Provident International provides life assurance and investment products to global expatriate and domestic affluent customers in Hong Kong, Singapore, United Arab Emirates and other selected markets.

Aviva said in its full-year 2016 financial report that Friends Provident International is under strategic review. The insurer sees little growth in the unit, whose main clientele are British expatriates, analysts say. Aviva's gross operating profit in Asia dropped 4% year over year in 2016, compared with a 12% increase in gross operating profit globally.

Aviva has received a number of pre-emptive offers for the unit, although a formal bidding process hasn't started, the people said. Chinese conglomerates Fosun Group and HNA Group are among those evaluating the unit, according to two of the people. Both companies declined to comment.

A spokeswoman for Aviva said there is no update on the review and declined to comment further.

Goldman Sachs Group Inc. is running the sale, people familiar with the situation said. The bank declined to comment.

Overseas insurance companies are attractive to Chinese buyers as they can then reinvest the premiums collected without going through China's foreign-exchange approval process, a great advantage at a time when the country is tightening its capital outflow.

Chinese companies bid aggressively for ING Life's South Korea unit last year. They also struck deals to acquire Singapore-based Asia Capital Reinsurance Group Pte. Ltd., Hong Kong-based Dah Sing Life Assurance Co. and most recently Hong Kong Life Insurance Ltd.

In January, Aviva, together with Chinese private-equity firm Hillhouse Capital and tech giant Tencent Holdings Ltd., agreed to develop an insurance company in Hong Kong to focus on digital insurance.

As part of the agreement, Hillhouse and Tencent would acquire shares in Aviva Life Insurance Company Ltd. (Aviva Hong Kong), the insurer said at the time. Aviva and Hillhouse will each hold a 40% stake and Tencent 20%.

Write to Kane Wu at [e-mail] and Julie Steinberg at [e-mail]

(END) Dow Jones Newswires

March 28, 2017 01:34 ET (05:34 GMT)

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