KWAP narrows down foreign insurers to three

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KUALA LUMPUR: The Retirement Fund Inc’s (KWAP) has narrowed down its investment option to three foreign-owned insurance companies and it is in the midst of appointing an advisor on the matter, said chief executive officer Datuk Wan Kamaruzaman Wan Ahmad.

“We are at the point of appointing an investment bank as our advisor… (The companies are) the big ones, Great Eastern, Prudential and AIA,” he said.

KWAP, Malaysia’s second-largest pension fund, also has the potential to partner other institutional investors as the percentage of shares that must be owned in these insurance companies was relatively big.

“It (stake acquisition) depends on valuation. It might not be us alone actually… We might also be looking at partnering with institutional investors, maybe not just one, maybe two or three, but it depends because the stake is quite sizeable and there is so many around.

“Because of that reason, we might not necessarily buy one for ourselves but we might buy smaller stakes (in these companies), let’s say 10 per cent , 10 per cent, 10 per cent (respectively, in these companies),”  he told Bernama on the sidelines of the Bumiputera Agenda Steering Unit’s (Teraju) Super Series II event.

Wan Kamaruzaman said KWAP would appoint a financial reviser to conduct the selection process on its behalf so that it would not be deeply involved in the task.

KWAP will make the final decision after the process is completed and the result of the selection is expected to released by year-end, he added.

KWAP’s fund size grew 200 per cent from RM42 billion in 2007 to RM125 billion in December 2016, and of the amount, RM53.6 billion resulted from increased in investment income which in turn will be used to fund pension liabilities.

Bank Negara Malaysia has instructed foreign insurers, namely Tokio Marine Holdings Inc, AIA Group Ltd, Great Eastern Holdings Ltd and Prudential to comply with the foreign ownership rule which required overseas insurers increase local shareholder participation to at least 30 per cent.

The overseas firms have until June 2018 to comply with the ruling. — Bernama