M&G has sold a 15 per cent stake to one of Japan’s biggest life insurers in a partnership deal.
Shares in the financial group rallied yesterday after it announced that Dai-ichi Life is now its largest shareholder in a long-term tie-up. The deal is expected to bring just below £4.5billion in business to M&G and about £1.5billion to Dai-ichi Life over the next five years.
It is the latest example of a Japanese group teaming up with a UK firm after Tokyo-based Meiji Yasuda bought around 5 per cent of Legal & General in February.
M&G shares hit their highest level since June 2021 following yesterday’s announcement, but later gave up some of the gains. It still closed 5.5 per cent higher last night at 236.7p.
The business has been regarded as a takeover target after speculation Australia’s asset manager Macquarie was considering a £5billion bid in 2023.
But M&G chief executive Andrea Rossi said that the partnership would bolster its position to compete as a standalone company.
Boost: The deal is expected to bring just below £4.5billion in business to M&G and about £1.5billion to Dai-ichi Life over the next five years
‘I can see us having a great independent future in front of us,’ he said.
Rossi described the partnership as a ‘recognition of M&G’s strengths and clear confidence in our leadership, strategy and long-term prospects’.
‘It brings together two highly complementary international businesses with shared growth ambitions who aim to deliver excellent client service and sustainable shareholder returns.’
The deal will allow the business to have ‘even greater access to the Japanese and Asian market’, Rossi added.
M&G will become Dai-ichi Life’s preferred asset management partner in Europe.
Under the terms of the agreement, Dai-ichi Life will have the right to appoint a director to the board of M&G for as long as it holds at least a 15 per cent stake, M&G said.
Russ Mould, at broker AJ Bell, said: ‘The usually staid insurance sector burst into life as M&G’s strategic partnership with Dai-ichi Life generated excitement. The deal is expected to generate significant business for the company over the next five years.’
And Jefferies’ analyst Philip Kett said: ‘There appear to be no downsides to this partnership, and we expect it to be taken well by investors.’
Earlier this month, Dai-ichi Life said it would raise its stake in UK-based Capula Investment Management to 15 per cent from just below 5 per cent. And in April it bought a 15.1 per cent stake in Australian investment manager Challenger for around £408m.
Tetsuya Kikuta, president and chief executive of Dai-ichi Life, said: ‘We see our partnership with M&G acting as a spearhead to develop our presence across Europe and the UK, accelerating our strategy to become a global top-tier insurance group.’
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