HDI-Gerling Industrie Versicherung AG, a member of German insurer TalanxGroup, on Aug. 17 signed a deal to buy a 25 percent stake in Vietnameseinsurer PVI Holdings (PVI).
At a value of 93 millionUSD, the stake equates to 36,000 VND (1.7 USD) per share while PVIclosed on Aug. 17's session at its ceiling price of only 16,400 VND.When the deal is completed, PVI will increase its charter capital to 2trillion VND (97.1 million USD) from 1.6 trillion VND (77.7 millionUSD).
"Talanx is now our second largest shareholder afterPetroVietnam and the only shareholder in the insurance field," saidPVI's Chairman Nguyen Anh Tuan.
"We will be represented onthe supervisory board as well as the management board. We will shareour knowledge of the insurance business for the benefit of both sides,"said the German group's chairman Christian Hinsch.
Onexplaining why Talanx Group chose to be a strategic shareholder of thePVI in the context of a declining stock market, Hinsch said: "We havebeen investing outside of Germany for more than 30 years, and investingin Vietnam is part of gaining a foothold in the Southeast Asia market."
Vietnam was a dynamic and promising economy, while there was a lowpenetration rate in the insurance industry, he commented. "We don't lookat the moment, but we look at the long-term benefits. That is why weinvest," he said, adding that rising and falling was in the nature of astock market.
Hinsch also described the PVI as a "promising company" to invest in.
Questions were raised as to why the price of the deal was much higherthan PVI's market value. In response, Hinsch said that Talanx would begiven priority use of PVI's services, and that both sides wereimplementing provisions for a technical support agreement.
Some also asked if Talanx targeted the PVI because of its dominance inthe Vietnamese energy insurance sector. However, Tuan stated that energyinsurance accounted for only 30 percent of the company's revenue.
In addition, Hinsch declined to say whether Talanx would buy furthershares in the PVI from other foreign investors. "We are happy with our25 percent at the moment. We don't see a situation arising where wewould want to increase our share for the time being, but what isimportant to us is that we are the only strategic partner in terms ofthe insurance business."
PVI's general director Bui Van Thuansaid that the PVI had no plans to sell more shares to the OmanInvestment Fund after this deal, as the company was about to run out ofthe room for foreign investors. Its Oman partner now holds nearly 10percent of its capital./.