VinaRe will issue Swiss Re 16.8 million new shares at a price of Vnd75,000 per share. The price represents a premium to the Vnd62,000 that VinaRe traded at yesterday but is close to the high that the shares have traded at over the past 12 months.
Rothschild and Horizon Capital Advisers ran an auction on behalf of VinaRe to induct a financial cum strategic investor. A number of bidders were in the running given the uniqueness of the opportunity and the interest that global majors have in Vietnam.
VinaRe is the sole reinsurance company incorporated in Vietnam. It 2006, it held a 34% share of the combined life and non-life reinsurance market, and 59% of the domestic non-life reinsurance market in Vietnam. It was listed on the Hanoi Securities Trading Centre in early-2006.
ôPrice was a key input in the selection but Swiss ReÆs background in the reinsurance industry, the technical services agreement between the parties and the chemistry between the partners were all critical to the choice of partner,ö says a source close to the deal.
Swiss Re has had a business relationship with VinaRe for over a decade which will now expand to include Swiss Re offering the Vietnamese company technical assistance across all of its businesses, with a focus on further enhancing its reinsurance capabilities.
Swiss Re has agreed not to sell its shares for a minimum three-year period and will have the right to nominate one director on the VinaRe board. VinaRe has agreed that Swiss Re will be its sole strategic partner.
ôThis investment and strategic partnership with VinaRe reflects Swiss ReÆs growing commitment to Vietnam, one of the fastest growing economies in Asia, and is in line with our strategy of expanding our reinsurance business in Asia," says Martyn Parker, member of Swiss Re¦s executive board and CEO for Asia, in a written statement.
Swiss Re is a global reinsurer operating in 25 countries. It offers traditional reinsurance products and related services as well as insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re has operated in Asia since 1913.
The transaction is subject to regulatory approvals.
Credit Suisse is advising Swiss Re on the deal, adding to its growing roster of Vietnam business. In the last year, Credit Suisse has advised Vinashin, BaoViet and Indochina Capital.