(Bloomberg) — Discovery Ltd. and AIA Group Ltd.’s new Asian health-insurance technology business will look to bulk up through acquisitions and sees a valuation of several billion dollars over the next decade.
The newly formed Amplify Health will be rolled out in all of AIA’s 18 markets and target a burgeoning middle class and rapidly expanding health-care market, according to a statement Tuesday. It will serve 39 million individual policies at first and has huge potential for growth, the division’s chief executive officer said.
“We do think there’s some interesting businesses in Asia that could be complementary, and we’ll be working quite actively on that quite early on in the life of the joint venture,” said Jonathan Broomberg, who has previously headed up Johannesburg-based Discovery’s health-insurance arm.
“There is a business case which does see the potential for a business like this to be worth several billion dollars 10 years from now,” he said in an interview.
Discovery shares rose 1.6% as of 12:51 p.m. in South Africa, while AIA declined by 0.6% by the close in Hong Kong.
Discovery and AIA are looking to tap into an expected rise in Asian healthcare spending that represented just 4%-5% of the region’s GDP in 2020, while the middle class is seen rising to 2.6 billion people by 2030. The two insurers also see an acceleration in digital healthcare adoption as a result of the coronavirus pandemic — with lockdowns necessitating telephonic appointments — while demand for health devices like fitness trackers is also on the rise.
The deal “is very revenue accretive in a very short term, but the intention of both parties is to build a business of considerable value, and there’s no reason we shouldn’t do that because I think both parties bring unique assets into Amplify Health,” Discovery CEO Adrian Gore said.
Discovery will own 25% of Amplify Health, with AIA taking the balance.
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