$PNLF by Mshifu for http://bit.ly/Lkk9ab
Something good is happening at Panin Life, looking at how PNLF stock was traded in the last couple of weeks. The writings are on the wall for those who follow PNLF corporate actions since the beginning of this year. Let’s review those actions one by one:
On 6 Dec 2012, Reuters reported that Dai-ichi Lifeinsurance Co Ltd and Fukok Mutual Lifeinsurance Co Ltd are among the two shortlisted bidders for the strategic stake in Panin Life, subsidiary of listed PNLF.
On 22 Feb 2013, Panin Life announced the intention to increase paid-up capital from Rp243bn to Rp387bn. Panin Life is a 99.9% owned subsidiary of PNLF. PNLF itself will not participate in the rights issue, but its 99.9% subsidiary Panin Internasional will take on its rights. Post transaction, Panin Life will be owned by PNLF (62.9%) and Panin Internasional (37.1%). To me, it looks like that PNLF is shaping Panin International as a vehicle to be sold to a strategic partner, rumored to be either Daichi Life or Fukoka Life, both of which are big Japanese insurers.
On 6 Mar 2013, PNLF told IDX about its plan to conduct EGM (one month notice for EGM, likely to be in early April). We do not know the agenda for the EGM yet, at this point. But if I were to speculate, the agenda could be to seek shareholders approval for the sale of Panin International. The agenda will be revealed two weeks before the EGM date (last week of March).
On 11 Mar 2013, PNLF reported to IDX that it sold around 4mn shares of its treasury shares on 8 Mar, at a price of Rp240. From the initial balance of 78mn treasury shares, PNLF is left only with 7.5mn shares remaining. The action spooked some institutional holders of PNLF shares, who might have reacted by selling their shares in the market. Despite the big selling flow through foreign brokers, the stock held up amazingly well.
To me, the selling of treasury shares by PNLF does not necessarily signal a negative development. Tricky as it may be, PNLF will need cash to inject some equity into Panin Internasional, who will in turn use the cash to buy its stake in Panin Life via the rights issue. For the relatively small cash outlay, the potential return can be extremely attractive if it later turns out that Daichi Life is willing to pay US$200mn or more for the 37.1% stake in PNLF held by Panin Internasional.
Bottom line…..it is going to be an exciting few weeks for PNLF. Stay tuned for more actions.