Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
KDB's attempt to sell life insurer embroiled in lawsuit
KDB Life Insurance headquarters in Seoul / Courtesy of KDB Life Insurance
By Park Jae-hyuk
By Park Jae-hyuk
The Korea Development Bank (KDB) has been embroiled in a lawsuit over its plan to sell KDB Life Insurance to JC Partners, according to industry sources, Wednesday.
Sources said Consus Asset Management filed an injunction Tuesday to ask the court to prohibit the state-run bank from selling the life insurer to the local private equity firm (PEF). Consus owns a 2.5-percent stake in a special purpose entity named KDB Consus Value, which holds a 26.9-percent stake in KDB Life.
The plaintiff raised a question about the validity of the deal signed between KDB and JC Partners, as the deadline for the latter's acquisition was Dec. 30. If the court accepts the claim, the contract will be nullified.
Consus is expected to look for another buyer who can acquire KDB Life for a higher price in that case. The asset management company has been reluctant to sell KDB Life for 200 billion won ($168 million), because over 1 trillion won has been injected into the insurer since it was sold to KDB Consus Value in 2010.
However, Consus was unable to stop the sale of KDB Life, because KDB Consus Value changed its articles of association in September 2020 to deprive Consus of its veto right.
The asset manager has eventually been able to protest the deal, since KDB Life's buyer and seller failed to fulfill their promise to complete the sale procedure within a year from when they signed the agreement Dec. 31, 2020.
The failure was mainly caused by the Financial Services Commission (FSC), which has delayed the screening JC Partners' qualifications for being the largest shareholder of KDB Life.
The FSC has remained skeptical about the soundness of JC Partners, given that the capital adequacy of another of the PEF's acquisitions, MG Non-life Insurance, was considered vulnerable by the Financial Supervisory Service.
In response, JC Partners submitted its plan to reform the management of MG by raising an additional 150 billion won, but the FSC has maintained a hawkish stance with the intention of protecting financial consumers.
KDB is attempting to sell KDB Life for the fourth time since 2014. It put the unit up for sale in September 2019 with the intention of selecting a preferred bidder by the end of that year to push forward with the sale in early 2020. However, only a few PEFs applied in the preliminary bidding in November 2019, so the KDB extended the deadline.