MAA looking at manufacturing, education

KUALA LUMPUR: MAA Group Bhd, which aims to have its Practice Note 17 (PN17) status lifted in 12 to 18 months, is assessing opportunities in the education and manufacturing sectors, said CEO and group managing director Datuk Muhamad Umar Swift.
The group will be exiting the Bank Negara Malaysia-regulated financial services sector once the disposal of MAA Takaful Bhd is completed, after which it will enjoy the added advantage of being able to pursue opportunities outside of the tightly regulated industry.
“We’re looking for something that provides a revenue stream to the group, and is priced correctly. The return on equities (in education and manufacturing) looks good. What we’re looking for is free cash flow generated from those businesses and future growth potential,” he told reporters after MAA’s AGM here yesterday.
“We’re also aware that these spaces are crowded and it’s not something that we’ve done previously. We have the financial capacity and we have some management capability but we’re not industry experts.
“Traditionally MAA has always invested in the medium term and monetise the assets in a period of time,” said Umar.
MAA is disposing of its 75%-owned subsidiary MAA Takaful to Zurich Insurance Co Ltd for RM393.75 million. An EGM will be held next Tuesday to seek shareholders’ approval for the disposal.
In line with MAA’s intention to maintain its listing status, a substantial portion of the sale proceeds arising from the disposal of MAA Takaful will be deployed to acquire new businesses to enhance the group’s earnings profile, regularise its financial condition and to address its PN17 status, in which it has been stuck for five years. MAA is required to submit a self- regularisation plan to Bursa Securities Malaysia by the end of this month.
“It would be our intention to submit a self regularisation plan, which includes the acquisition of business and increasing our interest in 40%-owned associate MAA General Assurance Philippines, Inc (MAAGAP),” said Umar, adding that it wants to exercise control in MAAGAP.
MAAGAP is ranked 12th among 69 general insurance players in the Philippines. MAA plans to accelerate the growth of its Philippine associate by seeking additional distribution partners, particularly in bancassurance.
The group is conducting a review of the company’s longer term business plan, capacity/capability issues including capitalisation levels and fulfillment of the applicable regulatory conditions, which it aims to conclude by September.
MAA is also evaluating its 48% associate Columbus Capital Pty Ltd’s loan book growth potential and longer-term sustainable profit generation capability before taking the next step to increase its stake in the Australian mortgage financing company.