Lend Lease snaps up CEF Life
The Australian-based Lend Lease group has agreed to pay A$250 million (about HK$1.25 billion) for a 55 per cent stake in Canadian Eastern Life Assurance (CEF Life), which is partly owned by Cheung Kong (Holdings).
The acquisition allows Lend Lease, a financial company listed on Sydney's stock exchange, to step into the local insurance market, as CEF Life is the SAR's seventh-largest life insurer.
A Lend Lease spokesman said the company would consider listing the insurer in Hong Kong.
Under the agreement, a Lend Lease subsidiary - MLC - will become the largest shareholder of CEF Life, replacing CEF Holdings, which had held a 47 per cent stake.
CEF Holdings is a 50-50 per cent joint venture of Cheung Kong and Canadian Imperial Bank of Commerce (CIBC).
MLC is the third-largest fund manager in Australia and the country's fifth-largest life protection product provider.
After the transaction, CEF Life will be renamed CEF Lend Lease Life.
David Clarke, Lend Lease's executive director, will be appointed chairman of the insurer.
Mr Clarke said the purchase was the most important component of Lend Lease's strategy to expand its financial services in the Asian region.
Lend Lease has already expanded in the Thai and Indonesian insurance markets by becoming a joint-venture partner of companies in those countries.
Terry Baker, chief executive of Lend Lease Financial Services Asia, said the proposed Mandatory Provident Fund (MPF) is the main reason for the company's move into the SAR.
'The Hong Kong Government's decision to introduce MPF late next year, which is similar to Australia's Super Guarantee Charge, offers further growth opportunities for life insurance,' Mr Baker said.
'The Hong Kong life insurance rate has grown at about 20 per cent a year since 1991 and is a very attractive market for MLC to operate in.' The transaction will bring a profit of $755 million to CEF Life's owners.
In addition to CEF Holdings, Shougang Holdings, Temasek Holdings and Wing Lung Bank have stakes in CEF Life. Cheung Kong and CIBC also have stakes in addition to their joint venture.
These companies have invested $480 million in the insurer since it was set up five years ago, according to Joseph Yu Lup-fat, managing director of CEF Holdings and outgoing executive chairman of CEF Life.
After the arrangement with MLC, CEF Holdings' stake in the insurer will be reduced to 21.1 per cent.
The separate holdings by Cheung Kong and CIBC will be cut to 4.5 per cent from 10 per cent, as will those of Temasek and Wing Lung Bank. Shougong's stake will be reduced to 5.9 per cent from 13 per cent.
Last year, the insurer recorded a premium income of about HK$600 million.