E.Sun Financial, Prudential Plc will launch strategic partnership today

E.Sun Financial Holdings Co (玉山金控) is slated to announce a strategic partnership with Britain's largest insurer today, introducing what will be the nation's first share-swap deal by a foreign financial-service provider.

At the partnership's launching ceremony this afternoon, Prudential Corporation Asia is expected to announce its plan to buy 5 percent of E. Sun Financial -- the nation's eighth-largest financial-service provider, and become its second-largest shareholder next to the biggest shareholder Cathay Life Insurance Co's (國泰人壽) 5.2 percent stake, a Chinese-language newspaper reported over the weekend.

The deal is worth NT$2.7 billion (US$81 million), based on E. Sun's closing share price last Friday, the paper said.

The company's stocks rose 1.84 percent to close at NT$22.1 per share on Friday.

Vice Premier Lin Hsin-yi (林信義) and Minister of Finance Lin Chuan (林全) are scheduled to attend today's ceremony, heralding E. Sun's efforts in consolidation and internationalization.

In November 2001, the government allowed banks, securities houses and insurance companies to combine into financial-holding companies in order to cross-sell various financial products.

So far 14 financial-holding companies have been established.

Lin, however, has said the ministry was looking forward to further consolidation among these companies.

Lin also said that the government plans to take the initiative in releasing shares of state-controlled banks including First Financial Holding Co (第一金控) to interested foreign buyers in order to beef up the local banking sector's competitiveness by introducing advanced management know-how and financial expertise.

Unfortunately, First Financial's share-sale plan, which is awaiting legislative approval, has been shelved during the legislative review sessions.

Financial authorities believe that the share-swap deal between E. Sun and Prudential will help create value-added benefits to the local lender, which offers banking, securities brokerage and asset-management services.

The partnership will also complete E. Sun's business scope by launching insurance products to create synergy while beefing up its international competitiveness.

As of Sept. 30 last year, E. Sun posted NT$3.9 billion in nine-month revenue. It also estimated to reap NT$5.1 billion in full-year before-tax earnings last year with an estimated NT$2.18 earning per share.