KUALA LUMPUR: British insurance giant Prudential has reached an out-of-court settlement on a long-running shareholding dispute with its erstwhile partners in Malaysia, led by businessman Vincent Tan Chee Yioun of the Berjaya group of companies and including members of Johor’s royal household.
Financial executives and lawyers close to the deal told CNA that under a complex multi-million dollar settlement plan reached last week, the insurer is set to acquire an additional 19 per cent equity in Prudential Assurance Malaysia Berhad (PAMB) from a Tan-led Malaysian company called Detik Ria.
The proposed deal, which still requires regulatory approval from Malaysia – including from the Ministry of Finance and Bank Negara Malaysia, the country’s central bank – will see Prudential increase its holdings in PAMB to 70 per cent, up from 51 per cent.
Prudential and Detik Ria have been locked in a legal battle in Malaysia since 2019 over a dispute on their PAMB shareholdings and more recently, over dividend payments.
Detik Ria will retain the remaining 30 per cent interest in PAMB following the proposed sale to Prudential.
Detik Ria has begun talks with local institutional investors with the view to exit its equity interest completely from PAMB, the financial executives and lawyers added.
Pricing details remain sketchy, but two financial executives told CNA that the deal between Prudential and Detik Ria, which also features an out-of-court settlement of the shareholders’ dispute over dividend payments, could amount to over RM850 million (US$201 million) in total for Berjaya’s Tan and his partners.
“This deal will end all litigation and both parties have resolved all matters to the joint venture,” said one senior financial executive close to Berjaya’s Tan.
Malaysian media have reported on the shareholder dispute previously, but not on the latest settlement and the planned disposed of the equity interest by Detik Ria in PAMB.
Tan declined official comment for this article, but financial executives close to the businessman said that an announcement would be made after the Malaysian regulatory approvals are obtained.
Executives of Prudential also did not respond to CNA’s queries regarding the company’s plan to raise its interest in PAMB to 70 per cent, which is the maximum foreign entities can own under rules set by the Malaysia government.
If approved, the deal will give the multinational company firmer control over its Malaysian operations vested in PAMB.
A senior Prudential executive from the company’s headquarters in London did hint at a complete settlement to the fight with Detik Ria when contacted by CNA last week.
“This is the end of it,” the executive said in a terse mobile-chat message, referring to the long-drawn court battle.
Prudential had filed a lawsuit in Malaysia against Detik Ria in 2019 over a shareholding dispute.
This stems from a move by Detik Ria in 2018 to rescind an earlier agreement it entered with Prudential in 2008 to sell its entire interest in PAMB.
By the time Detik Ria sought to back away from the sale, the company led by Tan had already received roughly RM109 million of the total disposal price tag of RM114 million.
Prudential’s suit sought to enforce the disposal agreement by Detik Ria and the insurer subsequently received judgments in its favour from Malaysia’s High Court and Court of Appeal.
However, the Federal Court, Malaysia’s apex judicial institution, ruled in July 2024 that the agreement was not valid without the approval from the Ministry of Finance.
In April, Prudential filed for a review of this ruling claiming procedural illegality and denial of justice, but this final bid for full ownership of PAMB was rejected by a different Federal Court panel of judges in June.
Meanwhile, Detik Ria filed a fresh suit in late April against Prudential seeking a settlement of US$833 million over disputed dividend payments for its equity in PAMB.
But this dividend payment dispute was also resolved last week, with Prudential announcing last Thursday (Jul 31) that it will pay US$83 million to Detik Ria as settlement.
The insurer also agreed to waive a US$33 million debt owed by Detik Ria under the settlement agreement, which Prudential said in a statement represents a “full and final” resolution to the Malaysian firm’s April suit filed in the High Court.
“The settlement of this case does not impact Prudential’s control in respect of PAMB and its operations, nor does it affect our service commitment to our customers,” the Prudential statement added.
It is unclear why Detik Ria settled for roughly 10 per cent of what it was demanding in its legal action.
