French insurer AXA buys stake in Vietnam firm
HO CHI MINH CITY - French insurer AXA will pay 54 million euros for a 16.6 percent stake in Bao Minh , Vietnam's second-largest insurer, as it seeks to expand in the fast-growing economy.
Vietnam's insurance sector has expanded rapidly in recent years, spurred by economic growth above 8 percent in 2005 and 2006.
Growth potential in the country of 85 million people is huge as Vietnam spent about $10 per head on insurance in 2005, compared with $46.3 in China, industry reports show.
"We are keen to expand our strong position in promising markets with a good outlook," CEO Jan Van Den Berg of AXA's Asia-Pacific General Insurance, said before the contract signing.
"We believe Vietnam is such a market with many development opportunities and a people motivated and enthusiastic to pursue these opportunities," he said.
The deal values Bao Minh, or Ho Chi Minh City Insurance Corp, at around $450 million.
Bao Minh's CEO Tran Vinh Duc said demand for insurance has been rising in Vietnam which has seen a fast economic growth and higher investment since it joined the World Trade Organisation in January.
The deal with AXA is part of a plan to issue 32.1 million new shares to raise Bao Minh's registered capital by 73.9 percent to 755 billion dong later this year from 434 billion dong now.
Shares in Bao Minh, Vietnam's first listed insurance firm, gained 2.3 percent to close at 90,000 dong on Wednesday on the over-the-counter Hanoi Securities Trading Center where it debuted in November 2006.
Duc said Bao Minh's January to August's revenues rose more than 20 percent to 1.13 trillion dong ,
He did not give a profit figure but said the eight-month revenues accounted for 73 percent of the annual target.
The company has projected its net profit for the whole of 2007 to rise 9 percent to 110 billion dong and its return on equity is targeted at 18.5 percent for both this year and 2008, down from 23.2 percent last year.
Bao Minh has 21 percent of Vietnam's non-life insurance market and stands behind number-one insurer Bao Viet.
Reuters - September 12, 2007.
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