- Strategic partnership with Dai-ichi Life
- Expected to deliver $6bn new business
- Dai-ichi Life to take 15% stake
M&G (MNG) jumped to the top of the FTSE 100 on Friday (30 May), gaining 6% to notch-up a new three-year high of 243p, after the savings and investment firm revealed a strategic partnership with Japan’s Dai-ichi Life (8750:TPO).
As part of the tie-up the Japanese life insurance company said it intends to purchase a circa 15% shareholding in M&G, giving it the right to appoint a director to the board.
Investors welcomed the strategic partnership, with the shares scaling a fresh one and three-year high and closing in on the all-time peak of 250p reached in February 2020, on the eve of the global pandemic.
WHAT ARE THE FINANCIAL BENEFITS?
As well as driving new business flows M&G anticipates the partnership will ‘support growth’ in adjusted operating profit.
M&G CEO Andrea Rossi said the deal will ‘enable us to further capitalise on the significant private market opportunities across Europe and enable even greater access to the Japanese and Asian market where we will benefit from Dai-ichi Life Holdings market-leading expertise.’
The partnership is expected to deliver ‘at least’ $6 billion of new business flows for M&G and $2 billion for Dai-ichi Life over the next five years.
Half of the $6 billion in flows is expected to come from Dai-ichi Life’s balance sheet with the other half from joint-development opportunities such as distributing M&G products.
Likewise, the $2 billion of new business flows for Dai-ichi Life is likely to be a combination of balance sheet investments in, or distribution of, asset management products offered by Dai-ichi Life’s subsidiaries and the distribution of jointly developed products.
The Japanese firm will also consider distributing M&G products in Asia and Japan, as well as working together to develop new products.
Dai-ichi Life’s right to appoint a director to M&G’s board is subject to certain conditions and maintaining ‘at least’ a 15% shareholding, which it intends to purchase through the market, with no new shares issued.
