Swiss Re CEO: SoftBank not to become an anchor shareholder

Japanese conglomerate SoftBank is expected not to acquire more than a 10 percent share of Swiss Re’s share capital and therefore will not become the anchor shareholder Swiss Re would like to have, CEO Christian Mumenthaler said in an April 4 press conference.

The statement follows rumours that SoftBank would acquire a 25 percent stake in the reinsurer.

In February 2018, Swiss Re announced it had entered into preliminary discussions with SoftBank regarding a potential partnership and minority investment. Negotiations are still ongoing.

Mumenthaler has said earlier that it would be good for Swiss Re to have an anchor shareholder such as SoftBank.

At that time, he pointed to the fact that the Swiss Re business is “slightly more challenging than others because you have good phases and you have the occasional year with high volatility.”

Because the business does not fit the “typical quarterly reporting mentality you see in capital markets” and the time frames are “always longer than most of what is there in terms of reporting,” Swiss Re would “always see it as attractive to have some strong anchor shareholders,” Mumenthaler explained in February.

However, SoftBank is unlikely to become this “strong anchor shareholder” Swiss Re is seeking. “I don’t think that 10 percent would count as an anchor [investor],” Mumenthaler said.

Nevertheless, having SoftBank as a shareholder may be advantageous, as Mumenthaler suggested. The Japanese firm is very strong in Asia with strong ties to China for example through e-commerce giant Alibaba, he noted. “The whole high-growth element is interesting,” he said. SoftBank is also a major investor in technology and therefore has a good overview of the market, Mumenthaler noted. Through all the companies SoftBank owns, it has a reach of over 800 million customers. “These three elements are worth exploring,” Mumenthaler said. In parallel to the stake purchase negotiations, the two parties are exploring areas of potential strategic cooperation.

While Swiss Re emphasised that the stake purchase discussions remain at an early stage, CFO John Dacey said that it was unlikely that Swiss Re would shift treasury shares to the new investor but that instead SoftBank would have to seek to buy the shares on the market. Earlier rumours had it that SoftBank was considering paying a price of about CHF100 to CHF105 per Swiss Re share. However, Dacey explained that the value of the stake will depend on market prices. “If SoftBank decides to invest in Swiss Re shares it is between SoftBank and existing shareholders to [find an agreement] in terms of at what price they would be able to accumulate that stake,” Dacey said. “We have no indication of what price would be a market clearing price for that,” he added.

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