Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
LIG Insurance, the largest shareholder of LIG Life, is a listed company on the Korean Exchange. It has a market capitalisation of W1.047 trillion ($1.1 billion) as of the close of trading on January 29, 2008.
The acquisition will give Aviva access to AsiaÆs second largest insurance market after Japan. This is part of the groupÆs strategy to diversify away from the saturated UK and European insurance market and increase sales revenue from the high growing Asian regions.
From 2000 to 2007, the group expanded revenues attributed to Asia and North America from a mere 9% to 18%.
Andrew Moss, group CEO of Aviva, has laid out an ambitious target to see at least 20% growth per annum in the company's Asian business and to slash overall operating cost in the group by ú350 million ($696.5 million). The UK market makes up just 42% of its business today, compared to 58% seven years ago.
"No tolerance of underperformance," Moss says, referring to his expectations for the group's growth this year.
In the new venture, Aviva will supply new products for LIG, while Seoul-based Woori Bank will take up distribution through its 1,000 branches in South Korea. Woori will name a new CEO, while Aviva will send in a chief operating officer after this transaction.
Keith Perkins, AvivaÆs business development director for Asia-Pacific, says the selection process is still continuing. As of March 31, 2007, LIG Life had W1,300 billion ($1.38 billion) in total assets and an annual premium income of W328 billion ($349 million).
Perkins says he plans to aggressively expand the business to become the largest bankassurance channel in the country, penetrating South KoreaÆs lucrative wealth management and retirement markets.
Aviva will need to clear hurdles posted by local regulations on fund management licensing and offshore investments before its fund management arm Morley enters Korea.
Perkins says the assets gathered from the saving and investment-linked policies it plans to sell will be outsourced to third-party domestic managers in Seoul.
This is not the first time Aviva has gone after a top local player in Asia. In the past three years, Aviva has taken on a string of new ventures in Taiwan, Malaysia, Dubai, Sri Lanka and India. Between October to November last year, it signed up ChinaÆs largest oil and grain importer China National Oils, Foodstuffs and Cereal Corporations (Cofco) and TaiwanÆs second largest financial group First Commercial to expand its presence in fund management and insurance respectively.
Further to the insurance market, AvivaÆs fund arm Morley is acquiring a substantial interest in the regionÆs property markets. As previously reported by AsianInvestor, Morley has set down a budget of $10 billion to be invested in Asian real estate. Only $430 million of the $10 billion has been invested, the fund house revealed in its last disclosure in June 2007. It co-owns a property investment arm with JapanÆs Mitsubishi UFJ Trust and Banking in Tokyo.
ôSome corporates here are over-optimistic about the future of their businesses. Some of the multiples they put on their valuations is simply unrealistic,ö Perkins says.
However, his zeal for Asia is far from over. Perkins says he has already met Moss' 20% growth target this year, and he has three to four more acquisitions planned for the region before this calendar year ends.
Unlike competitor Prudential and AIG, the group will focus on market expansion through bankassurance and distributions by independent financial advisors instead of developing a large agency force in the region. This is for effective market penetration and cost saving reasons, says Perkins.
Aviva is currently the worldÆs fifth largest insurance group with total assets of $598 billion as of June 30, 2007. It is operating in 20 countries around the world including Australia, China, India, Sri Lanka, Hong Kong, Singapore, Malaysia, Taiwan and the Middle East in the Asia Pacific region.
As of September 30, 2007, Woori Finance Holdings was among KoreaÆs seven largest companies. It owns South KoreaÆs second largest bank, Woori Bank that operates over 1,000 branches and serve a total of 15 million customers.
CDPQ's Ivanhoe Cambridge hires ex-GIC real estate expert; NZ Super adds board member; Future Fund appoints chief people officer; BlackRock real estate CIO joins Singapore's Capitaland; AMP Capital hires MD for energy; Northern Trust AM names new CIO; T Rowe Price hires AU and NZ institutional head; Nuveen hires Southeast Asia institutional head; Citi names sustainability head in Singapore; and more
Investors are increasingly turning to private companies and private debt in their hunt for ESG alpha, but the age-old problem of transparency and due diligence remains
Already on the rise pre-Covid, investments into data centre assets in Asia have accelerated in the past year, fuelled by interest from investors across the spectrum.
Actively managed funds were also not found to have better odds of higher returns than more passive funds.