An industry source said the Sovereign Group is in discussions with the owners of Asian Diamond Plans for the acquisition of the pre-need firm. Upon its entry into the company, the foreign group plans to raise the paid-up capital of Asian Diamond Plans to P100 million from P50 million.
The source said the group is also looking at penetrating the Philippine banking market through the acquisition of a bank, which he refused to name as negotiations are still under wraps.
An SEC official said Asian Diamond Plans has already settled it trust fund deficiency of P13 million. The pre-need firm is owned by businessman Damaso Magbual.
The Sovereign Group’s main business has been the setting up and management of offshore and onshore companies and trusts to assist with tax planning and asset protection. It currently manages over 5,000 structures for a wide variety of clients.
It advises governments, major publicly quoted companies and professional law and accountancy firms.
The entry of the Singaporean-American group will bring to six the number of multinational firms in the pre-need industry. Among the multinational firms that have already made their presence felt in the country are Philam, Berkley, CMG, Sunlife and Manulife.
Under the SEC’s new rules, new entrants are required to have a minimum paid-up capital of P100 million. For those who cannot meet the capital requirements, the SEC has limited the types of plan they can sell. For one-plan type, the minimum capital is P50 million, for two plan types, P75 million, and for three pre-need plan types, and those selling education plans, P100 million.
Before the passage of the new rules, only eight out of the 45 licensed pre-need companies for 2002 were considered compliant.
To date, only 19 pre-need firms have complied with the P100-million paid-up capital.
Given a weak economic environment, pre-need plan firms experiencing tight liquidity problems are being urged to merge with bigger pre-need plan companies to cope with the prevailing financial difficulties and meet the agency’s stringent requirements. – Zinnia Dela Peña