Aviva plc (“Aviva”) announces that it is to sell Aviva Australia Holdings Ltd, its Australian life and pensions business and wealth management platform (“Aviva Australia”) to National Australia Bank (“NAB”).
- Aviva to sell Australian life business and wealth management platform to National
- Australia Bank
- Total cash proceeds of A$925 million (£452 million)
- Total cash proceeds represent 16 times 2008 net earnings
- Provides increased financial flexibility and improves IGD surplus by £0.4 billion
The expected proceeds of A$925 million (£452 million) comprise A$825 million cash consideration from NAB on completion, with a further amount of A$40 million
representing a dividend to be paid by Aviva Australia prior to completion, and a forecast amount of A$60 million representing a net asset adjustment to be paid post completion.
The sale supports Aviva’s strategy of focusing on the key growth markets in Asia where leading positions can be achieved. The decision to sell these businesses is based on the belief that it would be challenging to reach a leading position in Australia in the foreseeable future in an increasingly consolidated market. Aviva currently ranks ninth in the life market and its wealth management platform is ranked eighth.
Andrew Moss, Aviva CEO, said: “This transaction realises excellent value for Aviva shareholders at around 16 times 2008 net earnings and demonstrates the underlying
value of our business. It gives us greater financial flexibility and we can redeploy the capital to other markets which we believe will deliver better returns to our shareholders
over the next few years.”
Simon Machell, CEO Asia Pacific, Aviva, said: “I am delighted that National Australia Bank will acquire Aviva Australia. Looking ahead, we will focus on the significant long-term growth markets of Asia, in particular, China and India. Here we have quickly developed strong market positions and have become the second largest foreign life
insurer in China in just six years.”
Aviva Investors’ Australian operation was not part of the sale process. As a global asset management business Aviva Investors remains committed to the Australian market where it is focused on building its external funds under management, benefiting from the growth of the pensions market.
The sale is subject to regulatory approval and is expected to close in the third quarter of 2009.
The proceeds will be retained by the group and are expected to enhance the group’s IGD surplus by approximately £0.4 billion, compared to 31 March 2009. In 2008, Aviva Australia contributed 2.6% to group IFRS operating profit and 2.3% to embedded value on an MCEV basis. Aviva Australia generated an IFRS net profit after tax of £28 million, and contributed £335 million to group IFRS net assets and £2.3 billion to group IFRS total assets for the year ending 31 December 2008.
