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Aviva sparks City confusion with U-turn on $2bn sale of Singapore arm

Simon English

AVIVA on Monday U-turned on plans to sell its Singapore arm just days before new chief executive Maurice Tulloch unveils his plans for the misfiring insurance giant to the City.

A sale could have raised around $2 billion, analysts speculate, cash that could have been returned to placate shareholders.

Aviva said it will also keep hold of its China business given the “excellent relationship” with joint-venture partner Cofco and “high growth prospects”.

The businesses in Vietnam, Indonesia and Hong Kong are still up for grabs.

Aviva put the Asian arms up for strategic review in August. While Aviva’s shares yield a solid 7% dividend there has been wider disquiet about the company’s strategy. Top fund manager Richard Buxton at Merian Global Investors said recently of Aviva: “If you didn’t exist, no one would create you now.”

Andrew Moss was ousted in 2012 following investor unrest, with successor Mark Wilson following him out of the door a year ago. He angered his board by taking a non-executive role at BlackRock, a rival. Tulloch, appointed in March, was seen as a safe internal choice, if not inspiring. He presents his plan for the group at an investor day on Wednesday. He said in August that he wants Aviva “to be a simpler company”.

Aviva shares fell more than 3% today to 420p on the news that the Singapore sale won’t happen. The shares were nearer 540p 18 months ago.

City sources said Aviva looked hard at offloading Singapore, but noted that it generates cash for the group. Some of the other Asian businesses may require more investment to succeed.

A report on Bloomberg said Japan’s MS&AD Insurance Group and Canada’s Manulife were vying to buy the Aviva arms in Singapore and Vietnam.

Today Aviva said: “Following a thorough review of options for the Singapore business, including seeking offers… Aviva has concluded that the best value for shareholders will be achieved by retaining the business.”

Singapore and China will pay dividends to the wider group this year, it added.

The change of heart on Singapore puts pressure on Tulloch to come up with something more to offer shareholders. He could unveil more sweeping cost cuts than the £300 million a year promised by 2022.