April 18, 2024

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[THE INVESTOR] Private equity firm KKR & Co. is poised to acquire significant stake in Shinhan Financial Group, industry sources said on Oct. 15.

KKR President Joseph Bae is said to have visited Seoul last month to sign a memorandum of understanding with Shinhan Financial President Cho Yong-byoung. 

Shinhan Financial will sell up to 9.9 percent stake in Orange Life to KKR, which will swap it with that of the former’s stake in the insurer when it becomes a wholly owned subsidiary. The deal will allow KKR to hold more than 3.55 percent of Shinhan Financial.

Shinhan Financial last month announced it will acquire a 59.15 percent stake in Orange Life, formerly known as ING Life Insurance, for 2.29 trillion won (US$2.01 billion). The process is expected to take around three years during which Orange Life will be operated independently.

Shinhan Financial and KKR will also form a joint 1-trillion-won fund as early as next year aiming for global mergers and acquisitions. It is expected to expand to 5 trillion won.

Shinhan’s largest shareholders include a group of Korean-Japanese who funded 25 billion won when Shinhan Bank was launched in 1982, estimated to be holding more than 10 percent of the stake now, and National Pension Service with 9.55 percent. BlackRock Fund Advisors holds 6.13 percent while BNP Paribas owns 3.55 percent.

“This is the first time that Shinhan is seeking a strategic shareholder since the PNP Paribas case in 2001. This will expand its global presence,” said an industry source.

Shinhan Financial aims to boost the share of profits from overseas markets to 20 percent from the current 13 percent.

It is the largest financial group in Korea with 456.76 trillion won in assets including that of Orange Life, and posted a net profit of 1.99 trillion won in the first half of this year.

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