Prudential Life Main Bidding with KB and Private Equity Fund Participation... 'COVID-19' Variable

[Asia Economy Reporter Oh Hyung-gil] Private equity firms, including KB Financial Group, have entered the final bidding for the sale of Prudential Life Insurance, considered the biggest deal in the insurance industry this year.

According to the insurance and investment banking (IB) industries on the 19th, KB Financial, Han & Company, and IMM Private Equity (PE) participated in the final bidding for Prudential Life Insurance held that day.

The seller, Prudential, plans to select a preferred negotiation partner and sign a stock purchase agreement (SPA) as early as this month.

The key issue is the price. As of the end of June last year, Prudential Life Insurance ranked 11th in the industry with assets of 20.19 trillion KRW. It is considered a prime asset with the second-highest return on assets (ROA) and the highest risk-based capital (RBC) ratio. As of the end of the third quarter last year, Prudential Life Insurance's net assets reached 3.1267 trillion KRW.

The industry estimates Prudential Life Insurance's value to be at least 1.8 trillion KRW and possibly exceeding 2 trillion KRW.

KB Financial, regarded as a strong candidate, has shown a strong commitment to expanding its non-banking sector, especially the life insurance division, as a task to reclaim its position as the leading bank after losing the top spot in the domestic financial group rankings to Shinhan Financial for two consecutive years.

Private equity firms such as IMM PE, backed by Woori Bank's acquisition financing, and Han & Company are also mentioned as strong competitors.

However, the recent spread of the novel coronavirus disease (COVID-19) into a pandemic has created a zero-interest-rate environment, introducing variables in the acquisition valuation. If the low-interest-rate trend continues long-term or additional rate cuts are implemented, there may be a burden to raise additional capital after acquiring Prudential Life Insurance.

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