AXA sells Hong Kong retirement fund business
AXA will sell its Mandatory Provident Fund and certain other retirement businesses to Principal Financial Group for HK$2.6 billion, marking the largest transaction in the sector since the retirement scheme was introduced in the city in 2000.
French insurer AXA will sell its Mandatory Provident Fund and certain other retirement businesses to Principal Financial Group for HK$2.6 billion, marking the largest transaction in the sector since the retirement scheme was introduced in the city in 2000.
Brokers say more consolidation among MPF providers is on the way as the market is too crowded. Among the 19 providers, the top four have a 66 per cent market share, with the rest vying for a slice of the HK$547 billion market.
Once the deal is completed, US-based Principal would surpass Bank Consortium Trust to be the fifth-largest MPF provider with a market share of about 6.4 per cent, according to research firm Gadbury. Principal is now ranked eighth, with a market share of 3.5 per cent. AXA is 10th, with 2.9 per cent.
The deal will narrow the gap between the fourth and the fifth-biggest players. BOCI-Prudential, the fourth-largest, has a 7.8 per cent share of the market. HSBC occupies the top spot, with 30.2 per cent, followed by Manulife, with 18.2 per cent, and AIA, with 9.8 per cent.
The sale includes the portfolio of AXA's MPF clients as well as the retirement schemes set up under the Occupational Retirement Schemes Ordinance (Orso) before the MPF came into being.
The deal includes a 15-year exclusive distribution agreement that will allow Principal to sell its retirement fund and allow it to offer MPF and Orso schemes through AXA's proprietary networks in Hong Kong. JP Morgan is the sole adviser to AXA in the transaction.