산업은행 Burning with Anxiety Amid Prudential Life Acquisition Battle

Interest in the First Trillion-Won Scale Large Asset of the Year

KB Financial and Woori Financial Foresee a Two-Way Battle

Low Interest in KDB Life Sale

[Asia Economy Reporter Kangwook Cho] Market interest is growing in the acquisition battle for Prudential Life Insurance, the first trillion-won scale large asset of the year. While the dominant view is that KB Financial and Woori Financial Group will face off, the possibility of large private equity funds (PEFs) joining the fray is also being anticipated. On the other hand, as the heat of the Prudential Life acquisition battle intensifies, the sighs of KDB Industrial Bank, which put KDB Life Insurance up for sale, are deepening.

According to the investment banking (IB) industry on the 3rd, Goldman Sachs, the lead manager for the sale of Prudential Life, recently sent investment memorandums (IMs) to major candidates and announced that a preliminary bidding will be held on the 20th. The sale target is 100% of the shares of Korea Prudential Life held by the U.S. Prudential Financing.

Prudential Life is evaluated as a 'prime asset' with both profitability and soundness. As of the end of June, its assets stood at KRW 20.1938 trillion, ranking 11th in the industry, but its net income for the first half of the year was KRW 105 billion, ranking 5th. In particular, its solvency margin ratio (RBC ratio), which indicates the asset soundness of an insurance company, is 505.1%, ranking first. This is outstanding compared to the financial authorities' recommended level (150%) and the industry average (296.1%).

KB Financial is considered a leading interested party in Prudential Life. Especially, having tasted defeat in the 2018 ING Life (now Orange Life) acquisition battle, their determination is strong. At that time, Shinhan Financial acquired ING Life, surpassing KB Financial to become the number one financial holding company by assets.

Yoon Jong-kyu, Chairman of KB Financial, expressed his intention to expand business areas through mergers and acquisitions (M&A) this year. In his New Year's address, Chairman Yoon said, "We must enhance the completeness of the group portfolio and secure new growth momentum through business area expansion," adding, "We will keep various M&A possibilities open and review them, approaching cautiously but pushing boldly and swiftly when opportunities arise."

Woori Financial is also likely to take an aggressive stance on the acquisition. Re-established in January last year, Woori Financial has a bank ratio of over 90%, making the expansion of its non-bank business portfolio urgent. Although it acquired asset management companies (Dongyang and ABL) and a real estate trust company (Kookje Asset Trust) last year, it has no insurance companies. Sohn Tae-seung, Chairman of Woori Financial, also stated in his New Year's address, "Entering the second year of the group system, we plan to continuously pursue strategic M&A."

The possibility of participation by large private equity funds (PEFs) is also high. MBK Partners, for example, made a profit by reselling its 59.15% stake in ING Life, acquired in 2013, to Shinhan Financial for KRW 2.2989 trillion five years later.

The Korea Development Bank (KDB) headquarters in Yeouido, Seoul, shows a quiet scene on the 20th, which General Motors (GM) headquarters referred to as the 'deadline' for Korea GM's court receivership. KDB is the second-largest shareholder, holding 17% of Korea GM's shares. However, out of the 10 board members, only 3 represent KDB, making it difficult to prevent GM headquarters from pushing forward with court receivership. Lee Dong-geol, chairman of KDB, stated that if GM headquarters unilaterally places Korea GM under court receivership, they will take legal actions such as lawsuits. Photo by Moon Honam munonam@

On the other hand, the sale of KDB Life, strongly promoted by Lee Dong-geol, Chairman of KDB Industrial Bank, has hit a snag. KDB Industrial Bank attempted to sell KDB Life twice in 2014 and once in 2016 but failed each time. Despite putting all efforts into the sale last year, even the initial goal of selecting a preferred bidder was not achieved. If the sale fails by next month, the bank may have to consider converting to a holding company under the Financial Holding Company Act and the Fair Trade Act. The cause is understood to be the large gap between the expected sale price and the market valuation. While KDB Industrial Bank expects a sale price of about KRW 600 billion considering the investment amount, private equity funds participating in the preliminary bidding reportedly offered around KRW 200 billion. With other competitive assets like Prudential Life also flooding the market, relative market interest appears to be even lower.

This content was produced with the assistance of AI translation services.