Founder of Antler Capital

Stanley Tsai, CFA

Stanley has over 20 years of capital markets experience on the buy side and sell side and as a credit analyst. He is the founder of Antler Capital, the culmination of his efforts to deliver differentiated solutions to global investors since 2021.

From 2017 to 2021, he was a Managing Director at CSPI Ratings, a credit rating agency servicing the USD bond market. He also led the firm’s efforts in sustainable finance.

Prior to that, he held various roles at Keefe, Bruyette & Woods, Nighthawk Capital, CLSA and Fitch Ratings. He was also an advisor at WWF, supporting the organization’s bankable nature solutions program.

Stanley has an honors degree in Finance from the University of British Columbia. He has been a CFA charterholder since 2004.

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Equity Bottom-Up

AIA <a href="https://www.smartkarma.com/entities/aia-group-ltd" target="_blank" data-smartkarma-citation="entities:14895:1" rel="noopener">(1299 HK)</a> 
AIA's proposed USD1.86bn minority investment in China Post Life marks a notable deviation from its long-held belief in maintaining control over its key operations. The transaction is touted as a barbell strategy that will give AIA's shareholders access to high-net worth clients on the one hand and the mass market on the other. In our view, the economics to China Post Life are clear, but the benefits to AIA may be more subtle (Exhibit 1).
The deal is fairly immaterial to AIA financially. At 1.34x historical P/B, the investment represents less than 0.6% of AIA's assets and 0.3% its IFRS capital. Valuation is in line with New China Life-A's <a href="https://www.smartkarma.com/entities/new-china-life-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:43:1" rel="noopener">(601336 CH)</a>, but we don't believe AIA is in it to turn a quick profit.
China Post Life stands to benefit almost immediately. The cash injection will boost the insurer's core solvency ratio from 110% to above 200%. But much more important is the promise of product ramp-ups, service upgrades, and sales training. On these fronts, China Post Life will be learning from the best.
The benefits AIA derives from the deal may be somewhat less tangible, but no less significant. The investment places the Hong Kong-based insurer front and center in the country's drive to widen the mass market's financial access. The unique position of the China Postal Group may open other doors down the road.
We are naturally skeptical of all insurance M&amp;As and joint ventures as so few of them have worked globally. That said, financial and executive risks seem to be well contained with the China Post Life transaction. While it may be an overstatement to call this transaction politically motivated, the potential regulatory and policy tailwinds it promises must be the envy of many of AIA's competitors.
<table class="table table-striped">
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<td style="width: 100%;">Exhibit 1: AIA's China Footprint</td>
</tr>
<tr>
<td style="width: 100%;">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/216/534/original/image_81757729821625228313721.png?1625228314" class="editor-image img-responsive" data-smartkarma-image-id="216534"></figure>
Source: China Banking and Insurance Regulatory Commission (CBIRC), National Bureau of Statistics, Company disclosures, Our analysis
</td>
</tr>
</tbody>
</table>
Related Insight
<ul>
<li>
<a href="https://www.smartkarma.com/insights/china-financials-silver-linings-playbook" target="_blank" data-smartkarma-citation="insights:53013" rel="noopener">China Financials: Silver Linings Playbook</a> </li>
</ul>

AIA (1299 HK) 
AIA's proposed USD1.86bn minority investment in China Post Life marks a notable deviation from its long-held belief in maintaining control over its key operations. The transaction is touted as a barbell strategy that will give AIA's shareholders access to high-net worth clients on the one hand and the mass market on the other. In our view, the economics to China Post Life are clear, but the benefits to AIA may be more subtle (Exhibit 1).
The deal is fairly immaterial to AIA financially. At 1.34x historical P/B, the investment represents less than 0.6% of AIA's assets and 0.3% its IFRS capital. Valuation is in line with New China Life-A's (601336 CH), but we don't believe AIA is in it to turn a quick profit.
China Post Life stands to benefit almost immediately. The cash injection will boost the insurer's core solvency ratio from 110% to above 200%. But much more important is the promise of product ramp-ups, service upgrades, and sales training. On these fronts, China Post Life will be learning from the best.
The benefits AIA derives from the deal may be somewhat less tangible, but no less significant. The investment places the Hong Kong-based insurer front and center in the country's drive to widen the mass market's financial access. The unique position of the China Postal Group may open other doors down the road.
We are naturally skeptical of all insurance M&amp;As and joint ventures as so few of them have worked globally. That said, financial and executive risks seem to be well contained with the China Post Life transaction. While it may be an overstatement to call this transaction politically motivated, the potential regulatory and policy tailwinds it promises must be the envy of many of AIA's competitors.



Exhibit 1: AIA's China Footprint




Source: China Banking and Insurance Regulatory Commission (CBIRC), National Bureau of Statistics, Company disclosures, Our analysis




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AIA / China Post Life Deal: A Worthwhile Excursion