In line with the recently announced strategy, Aviva plc (“Aviva”) has agreed to sell a majority shareholding in Aviva Singapore to a consortium led by Singapore Life Ltd (“Singlife”) to support the creation of one of the country’s leading insurance companies. The combination brings together Aviva Singapore’s scale and leading franchise with Singlife’s innovative and digitally focused capabilities. In Singapore, the new business will be initially branded as Aviva Singlife.
The Singlife consortium includes TPG, a leading global private equity investor, which will become the largest shareholder in the new group upon completion, Sumitomo Life, a leading Japanese insurer, and other existing Singlife shareholders.
On completion, Aviva will receive SGD 2.7 billion (£1.6 billion) in consideration, which is comprised of SGD 2.0 billion (£1.2 billion) in cash and marketable securities1, SGD 250 million in vendor finance notes and a 25% equity shareholding in the new group. The transaction represents a multiple of 18.7x Aviva Singapore’s 2019 IFRS profit after tax, 2.0x Solvency II Own Funds at 30 June 2020 and 1.9x Net Asset Value at 30 June 2020.
The transaction would have increased Aviva plc’s Net Asset Value at 30 June by £0.7 billion2, strengthened Solvency II capital surplus by £0.5 billion and increased the Group Solvency ratio on a shareholder basis by approximately 4 percentage points. In 2019, Aviva Singapore’s IFRS profit after tax was £83 million and it remitted £46 million cash to the group. The gross assets of Aviva Singapore were £6.6 billion at 30 June 2020.
Customers and partners of Aviva Singapore will continue to deal with Aviva as usual and there is no impact to customer policies as a result of this announcement3. Aviva Investors’ operations and clients in Asia will not be impacted by this transaction.
The proceeds will be used to further strengthen Aviva’s central liquidity and will be considered as part of Aviva’s broader capital management and debt reduction objectives.
The transaction is subject to customary closing conditions, including regulatory approval, and is expected to complete by January 2021.
The sale of Aviva Singapore is a significant first step in our new strategy to bring greater focus to Aviva’s portfolio. We have achieved excellent upfront value for shareholders but have also retained an investment in a leading Singapore life business with attractive long-term growth potential. The proceeds from the sale will further strengthen our financial position and enhance our ability to meet our strategic objectives.
We continue to work at pace and are seeking to take decisive action on our portfolio with the goal of further enhancing long-term value for our shareholders.
*This announcement contains inside information. The person responsible for making this announcement on behalf of the Group is Kirstine Cooper (Group Company Secretary).
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Notes to editors:
- Comprising SGD1.7bn of cash, SGD80m pre completion dividend and a SGD260m debt capital instrument underwritten by Aviva on market terms with the intention to sell to external investors in due course.
- Consideration translated into GBP at 30 June spot rate of 1.72.
- The current Aviva Singapore CEO Nishit Majmudar will be appointed as CEO of the combined entity’s Singapore licensed business.
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