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Prudential to select preferred bidder this week

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KB Financial Group Chairman Yoon Jong-kyoo, left; the Prudential Life Insurance Company of Korea headquarters in Seoul; and MBK Partners Chairman Kim Byung-ju / Korea Times file
KB Financial Group Chairman Yoon Jong-kyoo, left; the Prudential Life Insurance Company of Korea headquarters in Seoul; and MBK Partners Chairman Kim Byung-ju / Korea Times file

By Park Jae-hyuk

Prudential Financial and the lead underwriter Goldman Sachs are expected to choose the preferred bidder for the Prudential Life Insurance Company of Korea this week at the earliest, according to industry sources and media reports, Friday.

The sources said that KB Financial Group, Taiwan's Fubon Financial and three private equity firms (PEFs) ― MBK Partners, Hahn & Company and IMM Private Equity ― took part in the main bid in March.

Among them, KB Financial Group has been mentioned as the strongest candidate to take over the U.S. insurance giant's Korean unit.

Local news outlets reported that the nation's second-largest banking group offered around 2.5 trillion won ($2 billion), while MBK Partners and other bidders offered around 2 trillion won. A spokesman from Prudential Korea declined to confirm the report.

As an apparent effort to retake the leading banking group title from Shinhan Financial Group, KB Chairman Yoon Jong-kyoo has been desperate to acquire the life insurer, despite the KB Insurance union's criticism of his attempt to do so amid the economic slowdown.

"The company we've been interested in is one of the most sound life insurance companies, belonging to the top class," Yoon said at a general shareholders meeting March 20. "There is still high demand for insurance in Korea, so I think it is okay to acquire the business."

KB, however, may not be able to acquire Prudential if its board of directors rejects the plan, as the board did previously when the financial group attempted to buy ING Life Insurance Korea in 2012.

Back then, the KB board considered the price too high, so MBK was able to take over the insurer and sell it eventually to Shinhan after changing its name to Orange Life Insurance.

If KB fails to acquire Prudential, the new owner of the life insurer will likely be MBK as it has experience in managing a life insurer.

Although MBK and Shinhan signed an agreement that bans the private equity firm (PEF) from becoming active in the insurance business until September 2020, sources said Shinhan would not oppose MBK's takeover of the life insurer, because it wants its rival KB to lose in the bidding.

However, intensifying protests from consumer groups could be unfavorable for the PEF, under the current environment where the financial authorities are making consumer protection their top priority.

The Korea Finance Consumer Federation and four other consumer groups have urged the Financial Services Commission to bar PEFs from holding a controlling stake in insurance companies.


Park Jae-hyuk pjh@koreatimes.co.kr


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