HSBC to buy 10pc stake in Vietnamese insurer
Maria Chan and Tim LeeMaster
HSBC Holdings, the world's fourth-largest lender by market value, has agreed to buy 10 per cent of Vietnam Insurance Corp (BaoViet) for about US$255 million.
Subsidiary HSBC Insurance (Asia Pacific) Holdings has committed to hold its stake in BaoViet for at least five years, with an option to buy an additional 8 per cent of the insurer from Vietnam's Ministry of Finance during that period.
Headquartered in Hanoi, BaoViet provides both life and non-life insurance products in Vietnam. The group, with total assets valued at US$1.03 billion at the end of 2006, has 126 branches, 400 sub-branches, 5,000 employees and 40,000 agents.
BaoViet Insurance is Vietnam's largest general insurer with a market share of 35.2 per cent and 20.2 million policyholders in 2006. BaoViet Life has 1.6 million life insurance policies in force.
'This investment is in line with HSBC's stated strategy of targeting investment in high-growth markets with international connections,' said HSBC group chairman Stephen Green.
HSBC's goal is to double the contribution insurance makes to the group to 20 per cent from 10 per cent within five years. Insurance added US$1.6 billion to the group's pre-tax profit in the first half.
'[The investment] extends our reach in the Asia-Pacific region, leverages our global insurance capabilities and reinforces our aim to be a top 10 global insurer,' added Clive Bannister, the bank's group managing director for insurance.
HSBC will offer technical assistance to BaoViet across all businesses, which will include bringing in specialist staff and providing training.
The price was attractive to BaoViet and demonstrated an appetite among foreign companies for access to the Vietnam market, said a source.
Analysts said the deal would help set a path for other foreign entities that may want to invest in Vietnamese state-owned businesses.
Credit Suisse advised BaoViet and HSBC acted as its own adviser on the transaction.
Separately, HSBC Insurance (Asia-Pacific) announced early this week that it had signed a formal agreement to jointly establish a life insurance company in India.