Tuesday, October 2, 2012

Research By TKSSecurities on Aviva NDB



 


 
NDB - Gain a massive LKR 46 per Single share

 
Assurance Company Ltd (AIA). ANHL is the majority shareho lder (87.27%) of Aviva NDB Insurance (CTCE :LKR439.50).

· Further ANHL's second major shareholder NDB Capital Holdings (99.6% owned subsidiary of NDB Bank) has also agreed to sell its 41.56% stake to AIA.

· NDB Capital would also be selling its 5.0% direct holding in CTCE to AIA.

· Thereby AIA would hold 100% of ANHL and effectively own 92.27% (87.27% through ANHL and 5.0% direct) of CTCE.

· In addition to the sale of shares NDB Bank (NDB :LKR152.20) will enter into an 20 year bancassurance agreement with AIA. Further subject to regulatory approval NDB Bank would purchase an 83.9% stake of NDB Wealth Management Ltd., back from AIA (ANHL holds 83.9% in Aviva NDB Wealth Management Ltd.)

· It is understood that total net consideration payable by AIA is USD109.0 mn (circa LKR14.2 bn) including the bancassurance agreement and the sale of Aviva NDB Wealth Management Ltd.

· NDB Group would receive a net amount of USD59.0 mn (circa LKR7.7 bn) from the above transaction.

· As we understand this anticipated shareholding change in ANHL would not result in any changes in the direct shareholding in CTCE.

· Hence from the sale of shares NDB would receive a cash hoard of USD59.0 mn (which accounts to LKR46.70 per share), which would be partly used to buy back Aviva NDB Wealth Management Ltd. (Which is the fund management company) whilst the balance cash could be returned to the shareholders of NDB. We continue to maintain our recommendation on NDB BUY.

source - TKS Research
 

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