Mr Alexander Ankel, CEO of Avicennia Capital, shares on the opportunities he sees in the industry and the strategic advantages this insurance holding arm of Malaysia’s sovereign wealth fund fund Khazanah Nasional brings to the table for present and future subsidiaries.

By Benjamin Ang

If you have not heard of Avicennia Capital, you soon will, said Mr Ankel.

The insurance holding company of Khazanah Nasional Berhad (KNB), Malaysia’s sovereign wealth fund, has plans to expand its footprint across ASEAN through acquisitions or joint-venture investments.

The company’s vision is to become “the leading Malaysian-based insurance group specialised in growth markets, predominantly in life, health and pensions”. In a few selected markets such as Malaysia, it will also venture into non-life, where it will take a look into prevailing Nat CAT exposures and underlying motor profitability to determine the viability of the businesses.

Sustainable value for its stakeholders

With a clear focus on the insurance industry, Avicennia Capital’s niche expertise “ensures it is capable of making proper valuations and also to create sustainable value for its stakeholders together with the management teams of its existing and future subsidiaries”.

This also means that it holds a competitive advantage in the face of intense competition and increasing regulations in the industry, he said. “We have and will continue to select the right assets in the right markets, work with the best people in the industry and have a clear view on growth and profitability.”

Opportunities in ASEAN and Takaful

Appointed CEO in October last year, Mr Ankel explained their expansion strategy: “In phase one, we have a very clear view on building a solid market presence in Malaysia, Singapore, Philippines, Thailand and Indonesia. We are targeting companies that are either pre- or fully-scaled, amongst the top 10 in their respective markets and preferably have access to bank distribution capabilities.”

It currently owns a 49% stake in Sun Life Malaysia Assurance and Sun Life Malaysia Takaful and is majority shareholder with more than 90% share in Acibadem Saglik ve Hayat Sigorta, Turkey’s leading corporate health insurance company. “Acibadem Saglik ve Hayat Sigorta has a very unique and interesting business model which we aim to export to our other target markets in the near future,” he said.

Mr Ankel also sees opportunity in takaful. “Given the fact that the regulator and the insurance industry in Malaysia have built a very robust takaful business model over the past decade, we are very interested to enter the takaful arena with a clear view of exporting the business model to the growth markets where most of our global competitors have limited reach.”

“Most of the existing and upcoming developing nations and markets have a vast Muslim population. We believe that there is a space that neither the local nor global players are able to fill and this encourages us to enter these markets,” he added.

Southeast Asia “kampung”

Asked what strategic advantages the company brings to the table, he said: “First and foremost, Avicennia Capital has its roots and identity in Malaysia, centered in the thriving emerging economic development of Southeast Asia. This is our ‘kampung’ (a colloquial term for village in the region), where we originate from, that defines who we are, where we have good relationships, where we understand the true best practices and where we have a better knowledge on the real expectations from all stakeholders, which include the regulators, bank distribution partners, employees and ultimately, our customers.”

Local knowledge in Southeast Asia and growth markets is a key competitive advantage it places on the table against the one-size-fits-all-solution created by many of its global competitors, he said. And this strong local identity and knowledge is reflected in its name. (See What’s in a name?)

More than economical ambition

While some may wonder if being part of a sovereign wealth fund may be disadvantageous given potential political sensitivities, Mr Ankel said: “Having KNB as a shareholder is nothing but an advantage.”

KNB as a sovereign wealth fund, amongst the obvious economical strategic ambition, also has a clear goal to support nation building, he said.

While many global insurance investors enter Southeast Asia and other emerging markets because of the supportive underling demographics, room for growth and also
the ability to leverage their global portfolios, Avicennia Capital understands and respects the fact that insurance is more than just business. “In emerging
markets, insurance plays a major role in nation building and we are excited to be active in supporting these nation building efforts,” he said.

“We believe that Southeast Asia and many other emerging markets over the past one to two decades have matured enough to be able to build their own local and
regional business models based on Asian principles. Backed by a sovereign wealth fund with a clear responsibility for nation building, supported by local industry experts and good governance model from strong regulators in all our target markets, I believe that Avicennia Capital can emerge as a true Southeast Asian,
Malaysian-based growth market focused insurance platform,” he concluded.

What’s in a name?

Its strong local identity is captured in its name, said Mr Alexander Ankel.

Avicennia is a genus of a mangrove tree, also commonly known by local Malaysians as “api-api”, a reference to the fact that the fireflies often congregate on these trees. (“Api” means “fire” in Malay.)

The tree is often characterised by its strong aerial roots and longevity. Most of these trees live beyond 100 years.

The generic name of the tree is in honour of the great Muslim Scholar, Avicennia (c. 980-1037), who was a Persian physician and polymath, a great thinker and writer during the Islamic golden age. He wrote books on medicine which are still referred to today.