Local group set to mount takeover bid on Alico's Bangladesh operations
Thursday, 23 October 2008
Mushir Ahmed
A top Bangladesh conglomerate is set to mount a takeover bid on Bangladesh operations of the American Life Insurance Company (Alico), a subsidiary of embattled American Insurance Group (AIG), a source said Wednesday.
The local group having stakes in pharmaceuticals, fast moving consumer goods and textiles is interested to buy entire operations or a majority stakes in the country's largest life insurer, the source familiar with the bid told the FE.
"They may soon send a delegation to Alico's headquarters in Delaware to discuss the purchase," he said.
The move came as several regional giants have lined up to buy some of AIG's profitable ventures in Asia, as the troubled giants were trying to raise cash to ride out the global financial tsunami.
On Monday, Reuters said India's second largest company, Anil Dhirubhai Ambani-led Reliance ADAG, has launched a massive $6.0 billion dollar bid to buy the South-east Asian operations of AIG, excluding its subsidiary in India.
It was not clear whether the reported bid includes Alico's Bangladesh operations.
Although a local Alico official has flatly denied that the Dhaka branch was under the hammer, speculation on a probable sale mounted after its parent group unveiled plans to sell-off its profitable Japan and the Philippines units.
AIG, the world's largest insurance company, was forced to take nearly $85 billion bailout package from the United States government after the financial meltdown wiped off hundreds of billions of dollars of its assets.
Company chairman and chief executive Edward Liddy told a briefing early this month the company would sell off "non-core" assets to pay off its loan from the US Federal Reserve, but he offered no timetable or specifics on the sales.
"We'll sell as many assets as needed to repay our obligations," he told a conference call.
ALICO has been operating in Bangladesh since independence and is fortunate enough to survive the sweeping nationalization by the country's post independence government.
Currently it owns more than 20 per cent of the country's fast growing life insurance market. Last year it earned premiums worth Tk 7.71 billion, more than double its nearest competitors Delta Life and National Life companies.
The source said Alico Bangladesh's takeover by a foreign company would be 'messy' and 'legally challenging' as the government's nationalisation order -- dating back to 1973 -- makes its difficult for other companies to buy or rename it.
The government last week enacted a new insurance ordinance, allowing foreign companies to have stakes in local companies or set up their own operations, provided the authorities offer new licenses.
But insurance experts said the rules regulating the act have yet to be framed, which would further delay the entry of foreign company here.
Sources who are familiar with Alico Bangladesh's latest financial strength said the company might be valued more than half a billion dollars and only a few companies in the country would even 'ponder over' any purchase bid.
A top Bangladesh conglomerate is set to mount a takeover bid on Bangladesh operations of the American Life Insurance Company (Alico), a subsidiary of embattled American Insurance Group (AIG), a source said Wednesday.
The local group having stakes in pharmaceuticals, fast moving consumer goods and textiles is interested to buy entire operations or a majority stakes in the country's largest life insurer, the source familiar with the bid told the FE.
"They may soon send a delegation to Alico's headquarters in Delaware to discuss the purchase," he said.
The move came as several regional giants have lined up to buy some of AIG's profitable ventures in Asia, as the troubled giants were trying to raise cash to ride out the global financial tsunami.
On Monday, Reuters said India's second largest company, Anil Dhirubhai Ambani-led Reliance ADAG, has launched a massive $6.0 billion dollar bid to buy the South-east Asian operations of AIG, excluding its subsidiary in India.
It was not clear whether the reported bid includes Alico's Bangladesh operations.
Although a local Alico official has flatly denied that the Dhaka branch was under the hammer, speculation on a probable sale mounted after its parent group unveiled plans to sell-off its profitable Japan and the Philippines units.
AIG, the world's largest insurance company, was forced to take nearly $85 billion bailout package from the United States government after the financial meltdown wiped off hundreds of billions of dollars of its assets.
Company chairman and chief executive Edward Liddy told a briefing early this month the company would sell off "non-core" assets to pay off its loan from the US Federal Reserve, but he offered no timetable or specifics on the sales.
"We'll sell as many assets as needed to repay our obligations," he told a conference call.
ALICO has been operating in Bangladesh since independence and is fortunate enough to survive the sweeping nationalization by the country's post independence government.
Currently it owns more than 20 per cent of the country's fast growing life insurance market. Last year it earned premiums worth Tk 7.71 billion, more than double its nearest competitors Delta Life and National Life companies.
The source said Alico Bangladesh's takeover by a foreign company would be 'messy' and 'legally challenging' as the government's nationalisation order -- dating back to 1973 -- makes its difficult for other companies to buy or rename it.
The government last week enacted a new insurance ordinance, allowing foreign companies to have stakes in local companies or set up their own operations, provided the authorities offer new licenses.
But insurance experts said the rules regulating the act have yet to be framed, which would further delay the entry of foreign company here.
Sources who are familiar with Alico Bangladesh's latest financial strength said the company might be valued more than half a billion dollars and only a few companies in the country would even 'ponder over' any purchase bid.