Aviva plc (LON:AV) has announced that it has agreed to sell its 25.9% stake in Singapore Life Holdings Pte Ltd (Singlife), together with two debt instruments, to Sumitomo Life Insurance Company for total consideration of £0.8 billion (SGD 1.4 billion) payable in cash at closing.1,2,3 Sumitomo Life will pay consideration of £0.5 billion (SGD 0.9 billion) for Aviva’s equity stake and £0.3 billion (SGD 0.5 billion) for the two debt instruments. Sumitomo Life is currently a 23.2% shareholder in Singlife and sees Singapore as a key market within its overall Southeast Asia strategy.
· Aviva to exit Singlife joint venture for total consideration of £0.8 billion, including sale of debt instruments1,2,3
· Transaction further simplifies the group’s geographic footprint and supports the focus on capital-light business units
In 2022, Singlife contributed £17 million to Aviva’s operating profit.4 The combined carrying value of the equity stake and debt holdings contributed £729 million to Aviva’s IFRS 17 net asset value as at 30 June 2023. The transaction would have increased Aviva’s Solvency II shareholder surplus as at 30 June 2023 by £0.4 billion and the Solvency II shareholder ratio by c.8 percentage points.1 It would have increased centre liquidity by £0.8 billion.1 The equity value represents a multiple of 2.2x Solvency II Unrestricted Tier 1 capital as at June 2023.
Aviva’s exit from the Singlife joint venture represents a further step in the simplification of Aviva’s footprint following the international disposal programme completed in 2021. It is also consistent with the group’s ambition to focus on its capital-light business units. Aviva sold its majority stake in Aviva Singapore to a consortium led by Singlife in 2020.
The disposal proceeds will be considered alongside Aviva’s existing capital management framework. Under this framework, any surplus capital is available for reinvestment in the business, bolt-on M&A, and/or additional returns to shareholders.
The transaction is subject to customary closing conditions, including regulatory approvals where required, and is expected to complete in Q4 2023.
Amanda Blanc, Group Chief Executive Officer of Aviva, said:
“This is a good outcome for Aviva. The transaction further simplifies the business and we are in a very strong position to build on our trading momentum in the UK, Ireland and Canada.”
1. Using GBP/SGD spot rate of 1.70 as at 11 September 2023.
2. This comprises both the SGD 260 million reset subordinated perpetual capital securities issued by Singlife and the SGD 250 million fixed rate unsecured loan notes issued by Abbey Life Holdings Ltd. Both were issued to Aviva Group Holdings Limited as part of the consideration payable on disposal of Aviva’s majority stake in Aviva Singapore, completed in November 2020.
3. Prior to completion of the transaction, certain of Singlife’s shareholders will have (i) the pro rata right to acquire Aviva’s equity stake pursuant to a right-of-first-refusal; and/or (ii) the right to sell their Singlife shares to Sumitomo Life at the agreed per share price. However, this will not impact upon the ultimate disposal of Aviva’s equity stake.
4. Operating profit on an IFRS 17 basis.
