Dubai: In a landmark deal, the UAE insurance giant ADNIC is taking a 51 per cent stake in the Allianz Saudi Fransi Cooperative Insurance Company in a major push into Saudi Arabia. The value of the stake deal is SR499 million.
The Saudi insurance sector is primed for further growth, and making it a lucrative place to be for new entrants. Already, the Kingdom’s banking space has attracted UAE heavyweights, and insurance is thus seen as a natural progression.
“The transaction fits fundamentally within the core of the company’s (ADNIC) strategic pillars as it will allow it to further extend its presence into the Saudi Arabian market, deliver and optimize operating model efficiencies,” the UAE insurer said in a statement.
"To the extent that any external funding may be required at the date of completion, the company has access to sufficient funding facilities from banks to meet any requirements," the statement said. "The transfer
of monies for the acquisition is to be made on completion date i.e. after receiving all the necessary regulatory approvals."
Through these 3 years, the UAE insurance sector has seen multiple deals happen, as it pushes for consolidation in a market that is loaded with opportunities - but with a fair share of challenges too. But even with all the deals happening, ADNIC's SR499 million play into Saudi Arabia would rank at the very top.
ADNIC will be buying the stake from Allianz Europe, Allianz France and Allianz MENA Holding (Bermuda) Limited. (The Allianz exit follows similar patterns of big European insurers downsizing or going out in full from their Middle East exposures. AXA was a recent one.)
The transaction is conditional on 'obtaining a number of customary regulatory waivers and consents'.
- Vijay Valecha, Chief Investment Officer at Century Financial