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

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

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

“The proposed disposal will result in a pro forma 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 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% stake in MPIB. The call option can be exercised within two years from the completion of the disposal. The put option entails 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.

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 Cap 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 10 general insurers in the country,” said MPHB Cap.

The group said the disposal is in line with MPHB Cap’s plan to comply with a 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 in June 2013.

This article first appeared in The Edge Financial Daily, on December 19, 2014.