Singaporean firm acquires 22% interest in TPG trust fund

Sovereign Global Resources Ltd. of Singapore has purchased the 22 percent equity interest of the TPG trust fund in AsianLife and General Assurance Corp. (ALGA) for P84 million.

The sale was completed by the ATR-Kim Eng Capital Partners Inc.-Trust Department (ATRKE Trust), which held the shares in trust on behalf of the TPG Trust Fund. The 78-percent majority stake is held by ATR-Kim Eng Capital Partners Inc. (ATRKE Capital).

"ALGA, which was formerly GE Life, was a good investment," said Abelardo Cortez, trust officer of ATRKE Trust. "We were able to negotiate a good price for the shares and foresee the TPG Trust Fund generating substantial capital gains from the sale, in addition to cash dividends earlier received, thereby improving the fund’s liquidity."

Cortez added that the sale price puts a value in excess of P380 million for the whole company, which is within the recommended range of values arrived at by PricewaterhouseCoopers Financial Advisors Inc (PwCFA), who reportedly conducted an independent valuation of the business.

The value is higher than ALGA’s audited stockholders’ equity of P320.7 million as of end December 2004.

The final selling price of P84 million for the trust fund’s equity share represents a premium of 19 percent over its book value.

Referring to their valuation report, PwCFA principal Carlos Francisco said a value of P84 million represents a price-to-book ratio of 1.19. "This ratio is better than most of its peers in the Asean." The sale complies with the earlier request of the Securities and Exchange Commission (SEC) for the TPG Trust Fund to divest its 22-percent ownership in ALGA in accordance with the new rules affecting the pre-need industry.

The SEC prescribed these new regulations after the Fund and ATRKE Capital had already simultaneously purchased the shares from GE Capital in 2001.

ALGA provides comprehensive corporate life and non-life insurance products. It aggressively markets employee benefits products, and launched recently innovative products in the group hospitalization and healthcare plans category. ALGA is a subsidiary of the ATR-Kim Eng Capital Partners Inc. (ATR Capital), a member of the ATR Kim Eng Financial Corp. It is a holder of a composite insurance license, meaning it can sell both life and non-life insurance products. In 2003, it ranked ninth in the group insurance business.

ALGA’s sister company in the life insurance industry is AsianLife Financial Assurance Corp. (ALFA), which specializes in individual life products.

Last year, the combined premium income of ALGA and ALFA reached P410 million or P300 million and P110 million, respectively.

ATR-Kim Eng Financial, one of the largest non-bank investment company, acquired then All Asia Life Assurance and renamed it ALFA. It only started full operations in June 2004 although restructuring has started in the first quarter of 2003. – Ted Torres