3i and Khazanah lead $620m investment in reinsurance startup

3i and Khazanah, the investment arm of the Malaysian government, have completed a $620 million investment in what has been described to be the largest private placement for an Asian start-up. Each cornerstone investor committed $200 million to create the first pan-Asia focused independent reinsurer.

3i, Europe’s largest listed private equity firm, and Khazanah Nasional, the investment arm of the Malaysian government, have invested a combined $400 million (€300 million) in Asia Capital Holding. The Singapore-based pan-Asia focused independent reinsurance start-up raised $620 million via a private placement, to which 3i and Khazanah each committed $200 million. 

The remaining equity investment came from a syndicate of investors including Och-Ziff Capital Management Group, Morgan Stanley Private Equity Asia, Credit Suisse Private Equity Asia and Luxumberg Sicav, according to a statement.

Morgan Stanley acted as Asia Capital Holding’s exclusive financial advisor and sole placement agent.

Twelve months ago, prior to the private placement, Asia Capital Holding attracted a number of prominent local angel investors who will remain minority shareholders. The firm was founded by chief executive officer, John Tan, who has spent 30 years in insurance and reinsurance industry, mainly in Asia. Heini Buergi, cofounder and chief operating officer, has over 25 years of experience.

Asia Capital Reinsurance, a wholly-owned subsidiary of Asia Capital Holdings, will focus on high risk segments such as aviation, marine, energy, large infrastructure and engineering projects across Asia. The start-up has obtained an A- rating financial strength rating from A.M. Best, an insurance rating and information agency, according to the statement.

The reinsurance start-up and its Malaysian cornerstone investor will jointly form a local reinsurance joint venture in which Khazanah will hold a 70 percent interest.
Dato Azman Mokhtar, Khazanah’s managing director said: “Our participation in developing a groundbreaking business in Asia not only allows us to firmly position Malaysia as a key player in the insurance industry but will also enable us to drive the pan-Asian re-takaful (‘reinsuarance’ in Arabic) business in realising the aspirations of Malaysia International Islamic Financial Centre.”

3i is investing 10 percent of its latest fund in Asia, and relocating Chris Rowlands, a managing partner and head of group markets to Singapore in January. The firm raised €5 billion for Eurofund V, closing well above its €3.5 billion target in November.