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Chinese firms vie for ING Life Korea acquisition
Chinese companies will shake dynamics of local insurance market, study says
By Korea HeraldPublished : July 25, 2016 - 17:31
Yet another Korean life insurance company may be taken over by China.
The race to acquire ING Life Insurance’s Korean unit is shaping up to be an all-China affair, with the final round of bidding scheduled to open early next month, local reports said Monday.
According to Yonhap News and other media outlets, three Chinese companies are currently in the running: Hong Kong-based investment manager JD Capital, Taiping Insurance Group and Fosun International.
China Life and Anbang Life -- two acquisitive Chinese insurance giants -- were among early suitors along with Korea’s Kyobo Life, but they dropped out after the preliminary bidding which closed in May.
At stake is 100 percent of ING Life Korea, the country’s fifth-largest life insurer with 30 trillion won ($26.38 billion) in assets, currently held by Korean private equity firm MBK Partners. Local reports say the deal could fetch around 3 trillion won. MBK bought the assets for 1.8 trillion won from Dutch insurance group ING in 2013.
If ING Life is acquired by one of the three Chinese bidders, it will mark the third Chinese takeover of a Korean life insurance company after Anbang Life’s acquisitions of Tongyang Life in 2015 and Allianz in 2016. Although not from mainland China, Taipei’s Fubon Life Insurance bought into Hyundai Life Insurance in December 2015, acquiring a non-controlling 48 percent stake in it.
Korea Insurance Research Institute predicts the Chinese foray to continue, shaking up the competitive dynamics of Korea’s insurance sector.
“Chinese companies, sitting on ample cash, are likely to be the most aggressive suitors for Korean insurance assets,” said Cho Young-hyun, a KIRI researcher in a report released Monday.
Due to low interest rates and toughening capital requirements, some of the local life insurers may require recapitalizations by the largest shareholders, he predicted.
“Those who can’t, or are not willing to, afford this will seek to divest their controlling interest in the insurers. Then, the Chinese or some big banking groups in Korea will be the ones to grab those assets,” he said.
Unlike views held by some industry officials that Chinese groups are buying Korean insurers for a long-term learning experience, the researcher predicted that Chinese-owned companies will bring about a real challenge to existing players by offering competitive products based on their investments in higher-yielding Chinese assets and global networks.
By Lee Sun-young (milaya@heraldcorp.com)
The race to acquire ING Life Insurance’s Korean unit is shaping up to be an all-China affair, with the final round of bidding scheduled to open early next month, local reports said Monday.
According to Yonhap News and other media outlets, three Chinese companies are currently in the running: Hong Kong-based investment manager JD Capital, Taiping Insurance Group and Fosun International.
China Life and Anbang Life -- two acquisitive Chinese insurance giants -- were among early suitors along with Korea’s Kyobo Life, but they dropped out after the preliminary bidding which closed in May.
At stake is 100 percent of ING Life Korea, the country’s fifth-largest life insurer with 30 trillion won ($26.38 billion) in assets, currently held by Korean private equity firm MBK Partners. Local reports say the deal could fetch around 3 trillion won. MBK bought the assets for 1.8 trillion won from Dutch insurance group ING in 2013.
If ING Life is acquired by one of the three Chinese bidders, it will mark the third Chinese takeover of a Korean life insurance company after Anbang Life’s acquisitions of Tongyang Life in 2015 and Allianz in 2016. Although not from mainland China, Taipei’s Fubon Life Insurance bought into Hyundai Life Insurance in December 2015, acquiring a non-controlling 48 percent stake in it.
Korea Insurance Research Institute predicts the Chinese foray to continue, shaking up the competitive dynamics of Korea’s insurance sector.
“Chinese companies, sitting on ample cash, are likely to be the most aggressive suitors for Korean insurance assets,” said Cho Young-hyun, a KIRI researcher in a report released Monday.
Due to low interest rates and toughening capital requirements, some of the local life insurers may require recapitalizations by the largest shareholders, he predicted.
“Those who can’t, or are not willing to, afford this will seek to divest their controlling interest in the insurers. Then, the Chinese or some big banking groups in Korea will be the ones to grab those assets,” he said.
Unlike views held by some industry officials that Chinese groups are buying Korean insurers for a long-term learning experience, the researcher predicted that Chinese-owned companies will bring about a real challenge to existing players by offering competitive products based on their investments in higher-yielding Chinese assets and global networks.
By Lee Sun-young (milaya@heraldcorp.com)
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Articles by Korea Herald
