The proposed deal between Singapore’s NTUC Income and German insurer Allianz has been called off after the Singapore government intervened, saying that the proposed merger “would not be in the public interest”.
The proposed transaction, which was announced on July 17, would have seen Allianz acquire a 51% stake in Income Insurance for about US$1.6 billion.
The announcement of the deal sparked widespread controversy, prompting prominent individuals like Tan Suee Chieh, who previously led NTUC Income, and diplomat Tommy Koh to express their disagreement.
“The government has assessed the proposed transaction and has decided that it would not be in the public interest for the transaction, in its current form, to proceed,” said Edwin Tong, Singapore’s Minister of Culture, Community and Youth on Monday (Oct 14) during a Parliament session.
The authorities were concerned over the “terms and structure” of the proposed acquisition, as a proposed capital extraction and a lack of structural protections meant that Income’s social mission in Singapore could be at risk.
Authorities remain open to new deal
But the authorities remain “open” to any new deal which Income may pursue, Tong said.
“Whilst we will not allow the proposed transaction to proceed, we are nonetheless open to any new arrangement which Income may wish to pursue, whether with Allianz or any other partners, so long as the concerns highlighted are fully addressed,” he added.
In a reply in Parliament, Tong said that Allianz had put forward a “credible, sound proposal”, and that there were no financial or prudential reasons to object to the acquisition.
“From a financial perspective, it makes sense for Income to look at an entity that has global presence and strong network and that it is able to enter into it with a view towards a long-term strategic partnership,” said Tong.
The government has yet to close its doors on a foreign entity partnering with NTUC Income, Tong said, whether it’s with Allianz or any other entity, he added.
Singapore’s Prime Minister Lawrence Wong said in a Facebook post that the Government “supports having a strong partner for Income”. “We have no concerns over Allianz’s standing or suitability to acquire a majority stake in Income,” Wong said.
“Though this transaction will not proceed, we remain open to a new deal that Income may pursue with Allianz or other partners, so long as our concerns are fully addressed,” he added.
Government ‘had doubts’ about impact on Income’s social mission to Singapore
Tong stated that the Ministry of Culture, Community and Youth (MCCY), responsible for overseeing Singapore’s co-operative sector, had doubts about the proposed transaction’s impact on Income and the broader co-operative landscape.
NTUC Enterprises (NE), a major shareholder in Income, is a co-operative and owns 72.8% of Income.
Income — which dissolved its co-operative status and became corporatised in 2022 — was allowed to carry around SGD $2 billion (USD $1.5 billion) in surplus to its new corporate entity, Tong said.
But the ministry has “not seen” any arrangement to account for the SGD $2 billion surplus that had been carried over to the new corporate entity in the proposed transaction, he added.
Allianz had previously projected that up to SGD $1.85 billion (US$1.4 billion) could be returned to shareholders within the first three years after the deal.
“We find it difficult to reconcile the proposed substantial capital reduction, soon after the transaction is completed, with Income’s representations to MCCY during the corporatisation exercise,” Tong said. “There is no clarity on how this sum will be directed towards advancing Income’s social mission.”
The ministry lacked assurance that Income would maintain its commitment to its social mission following the takeover, Tong said.
“There are no clear binding provisions or structural protections in the deal to ensure that Income’s social mission will be discharged,” Tong added. “MCCY is not confident that NE’s intentions, or the assurances Income gave earlier to MCCY, can be upheld.”
The government understands and accepts the strategic purpose behind Income’s corporatisation exercise and potential partnership with Allianz, Tong said, and is only concerned over the “terms and structure” of the specific transaction.
Opposition to the deal was centered around how Allianz, a foreign insurer, could be potentially misaligned with Income’s mission to serve Singapore’s low-income workers.
Diplomat Tommy Koh expressed his disappointment after the deal was announced, commenting, “I feel sad that for many younger Singaporeans nothing is sacred and everything is for sale.”
Former CEO Tan also urged regulators to scrutinise the transaction, citing concerns about the integrity of commitments given by institutions.
