SINGAPORE (Dec 11): Great Eastern Holdings is acquiring QBE Indonesia for US$28 million ($38.4 million) in cash to deepen its footprint in Indonesia and build up its general insurance operations into a significant business pillar for the group.

QBE Indonesia has a rich history in the Indonesian general insurance market dating back more than 100 years, providing comprehensive insurance solutions to businesses, professionals and families.

Wholly-owned subsidiary Great Eastern General Insurance (GEG) on Monday entered into a share purchase agreement to acquire 100% of the shares in PT QBE General Insurance Indonesia (QBE Indonesia), a company registered in Indonesia, from QBE Asia Pacific Holdings and QBE Insurance (International).

Main image (left to right): Ed Rainsford, Head of Mergers and Acquisitions, Group Legal, QBE; Joshua Freitas, Group Head of Corporate Development, QBE; Ronnie Tan, Group Chief Financial Officer, Great Eastern Holdings; Khor Hock Seng, Group Chief Executive Officer, Great Eastern Holdings

Khor Hock Seng, Group CEO of Great Eastern, says, “QBE Indonesia is a strategic fit, providing us with the exciting opportunity to complement our existing life insurance presence in Indonesia. With this, we will be well-positioned to provide a comprehensive suite of both general and life insurance solutions to a country which has a fast growing economy and the largest population in South East Asia with over 260 million. Coupled with the fact that Indonesia’s non-life insurance penetration rate is among the lowest in the region, the market potential for us is tremendous. Additionally, the Great Eastern Group, being part of the OCBC Group, will be leveraging this strong Group synergy to create opportunities to better serve the community.”

Completion of the transaction is subject to approval by the Indonesian authorities and the Monetary Authority of Singapore. On completion, QBE Indonesia will become a wholly-owned subsidiary of Great Eastern through GEG.

The consideration was arrived at following arm’s length negotiations on a willing-buyer, willing-seller basis. Based on QBE Indonesia’s unaudited financial statements for the half year ended 30 June 2018, the book value and net tangible asset value of QBE Indonesia is IDR 452 billion ($43.1 million). The final amount of the aggregate consideration will be based on the book value of QBE Indonesia as at completion.

The above transaction is not expected to have a material effect on the net tangible assets or earnings per share of the Great Eastern group for the current financial year.

None of the directors or controlling shareholders of Great Eastern has any interest, direct or indirect, in the above transaction.

Year to date, shares in Great Eastern are down 8.5% to close at $25.45 on Monday.