Aviva Plc (AV/) and Haci Omer Sabanci Holding AS (SAHOL) hired Citigroup Inc. (C) and HSBC Holdings Plc (HSBA) for an initial public offering of their Turkish life insurance and pension unit, three people with knowledge of the matter said.
The companies plan to sell shares in Avivasa Emeklilik & Hayat AS, Turkey’s biggest life and private pension company, next year in Istanbul, the people said, asking not to be identified as the bank appointments aren’t public. A sale of 20 to 25 percent of the business is likely, one of the people said.
Issuers in Europe, the Middle East and Africa raised almost $28 billion in IPOs this year, according to data compiled by Bloomberg. That’s almost triple the amount in the same period in 2012. Avivasa manages 5 billion liras ($2.5 billion), or 20 percent of Turkey’s private pension savings, according to data by Private Pension Monitoring Center.
Haluk Dincer, head of retail and insurance at Sabanci Holding, said on March 28 that the companies may seek to sell shares in the second half of 2014. Dincer said Jan. 16 he expected the unit to be worth at least $1 billion.
Aviva Plc Chief Executive Officer Mark Wilson is selling assets and cutting costs to rebuild capital depleted by the financial crisis and shrink a 5.1 billion-pound internal loan. The New Zealander, who joined the company in January, is also looking to boost returns by generating more cash from developed markets and growing in emerging economies including Turkey.
The U.K.’s second-largest insurer by market value last week agreed to sell its 39 percent stake in Italian life insurer Eurovita Assicurazioni SpA for 33 million euros ($45 million). It sold its U.S. business to Apollo Global Management LLC for $2.6 billion in October.
Turkey’s government announced an incentive package in January in which the government will match 25 percent of private pension contributions up to the minimum wage level to boost savings.
Turkey, whose pension fund industry is at 3.6 percent of its gross domestic product, compared to a weighted average of 77 percent among the OECD members, has attracted international pension fund managers including Groupama SA, Cigna Corp. (CI) and Allianz SE.
Sabanci Holding shares rose 1.5 percent to 9.24 liras at 3:31 p.m. in Istanbul.
Zafer Kurtul, chief executive officer of Sabanci Holding, didn’t answer calls placed directly and through the company’s communications department. Meral Eredenk, chief executive officer of Avivasa, declined comment.
Nevnihal Ciftci, a spokesman for Citigroup in Istanbul, also declined to comment. A spokesman at HSBC in London, who asked not to be identified, declined to comment. A spokeswoman at Aviva in London declined to comment when contacted by Bloomberg.