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September 24, 2018

MBK Partners to face tough time selling ING Life

PUBLISHED : June 28, 2018 - 16:45

UPDATED : June 28, 2018 - 17:11

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[THE INVESTOR] The big question in business circles is whether MBK Partners -- Korea’s largest private equity firm -- can find a buyer for ING Life Insurance Korea amid the dimming sales prospects.

MBK Partners holds 59.15 percent in ING Life Insurance Korea. The PEF acquired ING Life from ING Group for 1.8 trillion won (US$1.60 billion) in 2013. With total asset of 31.4 trillion won at the end of last year, ING Life ranks as Korea’s fifth-largest life insurer.

 



Following a three-month due diligence, Shinhan Financial Group, the nation’s largest financial holding company, and MBK could not strike a deal, and the talks collapsed in late April.

Hit by the news, the share price of ING Life has been lingering below 50,000 won. On June 28, its stocks closed at 40,150 won. Shinhan is unwilling to pay more than the market price while MBK wants at least 50,000 won for the entire shares it is holding after retreating from more than 60,000 won.

Industry sources said that Shinhan wanted to buy a 30 percent stake with management rights worth 1.5 trillion won, which is the maximum the financial group can resource without burdening shareholders. MBK, however, wants to find a buyer who can buy its entire shares.

“I don’t understand why MBK would insist on a high price tag and set out strict conditions when it has already recouped its investments,” said one industry source, declining to be identified. “It won’t be easy to increase the value of ING Life in the future.”

This is not the first MBK has attempted to offload ING Life. In 2016, it tried to sell it to Chinese buyers, but failed due to the high price and deepening political tension between Korea and China. In May last year, ING Life made its stock debut on the KOSPI market.

Another potential buyer is KB Financial Group. KB, which does not have a life insurer under its umbrella, has shown some interest in ING Life, but has not acted on it. Yoon Jong-kyoo, chairman of the group, mentioned on June 28 that no progress has been made, according to Aju Economic Newspaper.

Shinhan Financial and KB Financial are also considered as potential buyers for other local life insurers -- Tongyang Life Insurance and ABL, held by China‘s Anbang Insurance Group. The China Insurance Regulatory Commission in April approached major Korean financial entities including Shinhan Financial and KB Financial to gauge potential interest in the two life insurance companies, according to local media outlet The Bell on May 8.

In the meantime, the deadline is looming for MBK as the brand license for ING expires at the end of this year, after which the life insurance company can no longer use the name.

By Park Ga-young (gypark@heraldcorp.com)

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