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THE INVESTOR
June 02, 2020
Big Reunion

Deals

KDB in talks with local PEF to sell life insurer

  • PUBLISHED :April 13, 2020 - 16:37
  • UPDATED :April 13, 2020 - 16:43
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State-run policy lender Korea Development Bank is in talks with South Korea’s private equity firm JC Partners to sell a life insurer unit as part of its restructuring process, an industry source said April 14.

JC Partners is the only bidder participating in the preliminary stage that is undergoing a due diligence for the acquisition, the source added.

KDB said further details cannot be disclosed because the talks are ongoing with the potential buyer before signing a deal.

“Regarding the sales of KDB Life Insurance stake, a due diligence is underway by a potential buyer, and nothing with respect to conducting the final bidding round or selecting the preferred bidder has been confirmed,” KDB said in a statement. “The sales price, timing of the deal and investing structure of the potential buyer have yet to be determined either.”

The news comes in KDB’s fourth attempt to sell the controlling 92.73 percent stake in what was formerly known as Kumho Life Insurance, a decade after buying it jointly with Consus Private Equity for 650 billion won ($532.83 million). 

KDB Life headquarters (KDB Life)



JC Partners has reportedly proposed to buy the controlling stake for some 200 billion won and injected an extra 300 billion won through newly-issued shares. The PEF also proposed to transform the company into a reinsurance company. KDB declined to comment.

JC Partners was founded in July 2018 by Lee Jong-chul, who formerly led Orix Private Equity Korea for 15 years.

Moves for mergers and acquisitions in Korea‘s insurance industry has been playing out over the past few months, as four major banking groups KB, Shinhan, Hana and Woori, as well as private equity firms, have whetted appetite for the new business opportunity.

On Friday, KB Financial Group inked a 2.3 trillion won acquisition of an entire stake in Prudential Life Insurance’s Korean operation, which marks the first life insurer arm of the nation’s No. 1 banking group by total asset.

Shinhan Financial Group is working on a tie-up of a subsidiary Shinhan Life Insurance and another insurer unit Orange Life Insurance -- formerly known as ING Life Insurance’s Korean unit that was once owned by private equity firm MBK Partners.

In the meantime, Hana Financial Group agreed to buy a majority stake in The-K Non-life Insurance for 77 billion won. Hana Financial vowed to strengthen the firm’s digital insurance solutions.

By contrast, KDB Life Insurance, the nation’s 12th-largest life insurance company by premium income, has drawn meager attention from the potential buyers, in part due to a low market share -- 2.3 percent as of end-2019 -- and new accounting standards that Korea is embracing in 2021, which would put all Korean insurers in a tough spot in terms of capital adequacy.

KDB Life recorded a net profit of 34.47 billion won in 2019, a turnaround from 1.1 billion won net loss the previous year. 

By Son Ji-hyoung(consnow@heraldcorp.com)

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