By Kim Tae-jong
KB Financial Group and Korea Life Insurance have been included in the shortlist for preferred bidders to buy ING Group’s Asian insurance business, according to market sources Thursday.
The shortlist came as a second phase after the Netherlands-based financial group accepted the preliminary bids for the sale of its Asia-Pacific unit two weeks ago. According to the sources, about 20 Korean and international potential suitors have lined up to get access to the preliminary sale documents by submitting letters of intent.
Other suitors to advance to the next round of bidding include two biggest U.S. life insurers MetLife and Prudential Financial, and Canadian-listed Manulife Financial and Canada’s life insurer Sun Life. Japan's Nikko Asset Management and U.S.-based Principal Financial Group are also the other shortlisted parties.
The participation of big global financial groups and insurers has intensified the competition for what would be the biggest insurance industry transaction of its kind in Asia, as they see a great growth potential in the Asian market due to expanding middle classes who buy life, health and savings products, market analysts said.
ING’s insurance operations have been on the market for a while as the firm has to divest its Asian insurance business, worth $6 billion, by 2013 in order to receive state bailout funds after being badly exposed to the eurozone debt crisis.
According to the sources, ING Group will review preliminary bids of those on the shortlist for the next five to six weeks and begin the actual bidding in July once the group selects preferred candidates. ING will soon send detailed information to interested parties in the coming weeks.
Although detailed conditions for the takeover have not been announced, the group is expected to divest investment management operations separately instead of selling its Asian interests all together. ING Group’s Asia-Pacific insurance arm consists of regional branches in Korea, Japan, Malaysia, Hong Kong, China, Thailand, and India.
One of the potential scenarios is that the group will divide its Asian operations into three packages ― South Korea, Japan and Southeast region, because KB Financial Group and Korea Life Insurance are on the shortlist. The former publicly said they are only interested in ING's Korean life-insurance operations while the latter said they can only afford to buy ING’s Southeast region business.
Both KB Financial Group and Korea Life Insurance declined to comment on detailed plans and conditions, citing confidentiality.
In a phone interview with The Korea Times in May, KB Chairman Euh Yoon-dae said, ““If the Dutch group decides to sell its Korean operation separately from other assets, we will join the bidding as a single bidder. If they sell its entire Asia operations as a package, we will seek to form a consortium as we have no financial capabilities to buy all of them.”
The shortlisted bidders are expected to come up with detailed strategies and meet with ING's management over the coming weeks before deciding whether to submit a final binding bid for the business.