Sumitomo Life Insurance Company, Japan’s third largest life insurer, spent VND4.01 trillion (US$173 million) on purchasing over 41.4 million shares or a 4.61% stake in Vietnam’s major insurance company Bao Viet, local media reported.

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This is equivalent to a share value of VND96,817 (US$4.18) apiece, a 30% higher than the value of VND74,000 (US$3.19) at the close on December 18.

As result of the purchase, Sumitomo Life, Bao Viet’s second largest shareholder, raised its shareholding at the local insurer from current 17.48% to 22.09% or 163.94 million shares, while the registered capital of Bao Viet increases to VND7.42 trillion (US$319.11 million).

The shares subject to acquisition would not be transferable within one year since the sale.

In 2012, Sumitomo Life acquired 122.5 million shares of Bao Viet for VND7.09 trillion (US$340 million) from HSBC Insurance Holdings.

Sumitomo Life considers Vietnam a potential market for life insurance business, particularly with a population of over 90 million and growing disposable income. Meanwhile, the total market premium revenue in 2018 accounted for 1.5% of the GDP, much lower than the share of 6.72% of GDP in Japan.

Sumitomo Life is expected to support Bao Viet expanding operations and networks, with the latter using the proceeds in enhancing financial capabilities, improving IT infrastructure and liquidity.

The Ministry of Finance is Bao Viet’s largest shareholder with a 72% stake, and State Capital Investment Corporation (SCIC), the Vietnamese government’s investment arm, ranks third with a 3.16% stake.