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The National Reinsurance Corp. of the Philippines announced it would
take in a strategic investor that would help the company expand its
capital base and enter the regional reinsurance market.
PhilNaRe, the country’s only reinsurance firm,
will likely seal the deal within this year with investors who could
buy at least 20 percent or 800 million of the company’s unissued
shares, Winston Garcia, PhilNaRe chairman, told reporters on the
sidelines of the stockholders’ meeting,
Garcia, who is also the Government Service
Insurance System (GSIS) president and general manager, said one
entity has expressed “keen interest” on PhilNaRe and will
complete its due diligence of the company within two to three
months. GSIS, which holds at least a 34-percent stake in the
company, is the biggest shareholder of PhilNaRe.
The executive said PhilNaRe is open to other
interested companies and has tapped the Rothschild Group as
financial consultant to its negotiations with potential investors.
Rothschild was able to sell a stake in Vietnam Reinsurance for six
times its book value, Garcia said.
He said PhilNaRe has a set a “substantial”
premium over its current book value of P2.80 per share, which its
consultants said was “achievable”. Proceeds of the deal would go
to increasing the firm’s investment income and its capacity to
reinsure more as it gears up to clinch businesses in the Southeast
Asian region.
Besides the increase in capital base, PhilNaRe
hopes the strategic investor can give it a leg up in terms of
reputation and knowledge exchange.
Garcia said, “We need a strategic investor who
will give us credibility and will also share their experience in
business with us and just as we will share our business with them.
It has to be more or less a symbiotic relationship. The
International Finance Company [IFC] does not give us strategic
value, they’re just investors. It has to be a strategic investor
in the reinsurance market.”
Last year, PhilNaRe said the IFC, the investment
arm of the World Bank, was interested in supporting PhilNaRe’s
maiden share offering through private placement of $15 million.
However, the deal fell apart and opened possible partnership talks
with other reinsurance firms.
Early this month, PhilNaRe disclosed that it
signed a memorandum of understanding with Singapore-based ACR
Capital Holdings Pte Ltd. The accord may lead to a possible
long-term strategic partnership to build the company’s portfolio
of Asian businesses, the company said.
-- Likha Cuevas-Miel
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