KUALA LUMPUR (Dec 18): MPHB Capital Bhd (MPHB Cap) is selling its 49% equity stake in its wholly-owned unit Multi-Purpose Insurans Bhd (MPIB) for RM355.8 million, valuing the group’s insurance business at book value of 2.45 times.

In a statement, MPHB Cap’s wholly-owned subsidiary, Multi-Purpose Capital Holdings Bhd (MP Cap), has entered into a conditional share purchase agreement with Generali Asia N.V. for the divestment of the 49% equity stake.

The Edge Weekly previously reported the transaction would value MPIB in the range between 2.4 and 2.5 times price-to-book ratio, and said the transaction value for the 49% equity stake in MPIB could be between RM350 million and RM360 million.

“The proposed disposal will result in a proforma gain of about RM208.6 million, based on the audited consolidated financial statements of MPHB Cap as at Dec 31, 2013,” said the group.

Following the divestment, MPIB will be operated as a joint venture between MP Cap and Generali Asia.

On top of that, MPHB Cap has entered into a call and put option agreement with Generali Asia, with the call option entailing an option for the latter to acquire up to 21% equity stake in MPIB. The call option can be exercised within two years from the completion of the disposal.

Meanwhile, the put option entails an option for the disposal of all shares acquired in MPIB, in the event that approval from Bank Negara Malaysia is not obtained for the exercise of the call option.

As a result, Generali Asia will hold a minority shareholding in MPIB, in the event the put option is exercised.

Subject to the approval of its shareholders, MPHB Capital expects the disposal to be completed by early 2015.

“The proposed disposal will see the entry of Generali Asia group into the Malaysian non-life insurance market, placing itself among the top ten general insurers of the country,” said MPHB Capital.

The group added the disposal is in line with MPHB Capital’s plan to comply with the condition enforced by the central bank, of the individual shareholding limit, not exceeding 10% in MPIB, within five years from its demerger from Multi-Purpose Holdings Bhd (now Magnum Bhd) in June 2013.

MPHB Capital share price climbed 10 sen or 5.15% to RM2.04, giving it a market capitalisation of RM1.46 billion.