Five companies are in the race to acquire Prudential Life Insurance Co. of Korea, the South Korean arm of Prudential Financial, according to investment banking sources.
The companies are Taiwan's Fubon Financial Holdings and four domestic financial firms - KB Financial Group, MBK Partners, Hahn & Company, and IMM Private Equity, according to a report by The Korea Economic Daily. The deal is expected to net around KRW2 trillion ($1.7bn).
US-based Prudential Financial Inc. put the South Korean insurance arm on the market in late 2019 as part of efforts to slim down overseas assets ahead of the new US accounting standard effective from 2022.
Among the five bidders, Fubon Financial is the only foreign participant. It already runs a Korean insurance firm, Fubon Hyundai Life Insurance Co. Ltd. and has a minority stake in Woori Financial Group as a strategic investor.
The strongest contender is KB Financial Group, which has been eager to bulk up in size by bolstering its non-banking units. When combining Prudential Life with KB Life Insurance Co., which stands 13th domestically by assets, its ranking will automatically jump to fifth, putting it in a better position to reclaim its seat as the country's leading financial house.
Among the private equity players, MBK Partners is said to be the most formidable, with a proven track record in the sale and acquisition of insurers. IMM PE and Hahn & Company have in recent years expressed interest in Korea's life insurance market and have been on a hunt for potential deals.
According to the report, Prudential Life has a net asset value of KRW3 trillion ($2.58bn), and posted a KRW101.2 billion ($87.2m) operating profit in the first half of 2019. Its full-year 2018 profit was KRW220.4 billion.