BuyING

Bidders line up for insurance giant’s up-for-sale Asian unit

By Kim Tae-jong

The competition between Korean and international bidders for ING Group’s Asian insurance business is increasing, industry sources say, adding intensity to a wave of mergers and acquisitions (M&A) surrounding firms here.

The top contenders appear to be Korea Life Insurance and U.S. financial giant Prudential as they see what would be Asia’s second-biggest insurance industry transaction ever as highly profitable.

“It is obviously a very attractive item for us,” an official from the Korea Life Insurance said. “The M&A would allow us to easily advance into the East Asian market. Without the deal, it would normally take at least two or three years simply to get a license if we wanted to do business in those countries.”

But they will take necessary steps once more detailed conditions for the takeover are announced, he said.

Prudential, the No. 2 insurance provider in the United States, has already hired Bank of America Merrill Lynch for advice on a possible bid.

ING’s insurance operations have been on the market for a while as the firm has to divest its Asian insurance operations, worth $6 billion, by 2013 in order to receive state bailout funds after being badly exposed to the eurozone debt crisis.

Market insiders claim that the relative stability in the Asian markets has been helping the Dutch-based financial group attract quite a broad range of buyers. However, ING has yet to reveal detailed conditions of the sale. Previously, the company had considered divesting investment management operations separately instead of the Asian operations all together, but ING Chief Executive Jan Hommen ruled out the possibility, saying such separated operations would be too small.

Along with Korea Life Insurance and Prudential Financial, other international insurers such Metlife and AIA Group are also ready to vie for a takeover bid for ING's Asia-Pacific operations, reviewing the feasibility of such a move. Some Chinese insurers have also expressed interest.

AIA Group is known to have named Deutsche Bank AG and Morgan Stanley as advisers for the potential deal.

Holding companies of major local banks such as KB Financial Group, Shinhan Financial Group and Hana Financial Group have also expressed their interest.

KB Financial Group has emerged as one of the strongest candidates since its chairman Euh Yoon-dae has expressed an intention to bag ING.

“We’re interested in taking over ING,” Euh told reporters last month. “It is expected to bring us synergy effects.”

But since his remarks, the group has not taken any official steps toward a bid.

Market insiders predict the group may establish a consortium with other financial parties as the deal for the Asian insurance operation is so big. But officials from KB Financial Group said it is just one of many possibilities.

“Even if we join the bidding, visible steps will be taken later this year or early next year,” an official from the group said. “Our chairman is definitely interested in ING but he also said the group will not engage in M&A deals this year because he thinks we should first focus more on financial stability.”