KB Financial likely acquirer of Prudential Life KoreaMarch 26 2020 by Yvonne Lau
Korean banking giant KB Financial is the frontrunner to acquire Prudential Life Korea, as they’ve thrown in a W$2.2 trillion (US$1.8 billion) bid for the insurer – the highest price in the acquisition war, says a report by Pulse News Korea.
Other organisations in the running – such as South Korean firms IMM Private Equity and Hahn & Company – put in bids that stopped at W$1.5 trillion (US$1.2 billion).
It is understood that the final acquirer will be confirmed this week.
On March 17, InsuranceAsia News (IAN) reported that the sale of Prudential Life Korea, a subsidiary of US-headquartered Prudential Financial, was set to become a three-way tussle between KB Financial, MBK Partners and IMM Private Equity backed by Woori Financial.
KB Financial is one of South Korea’s top three banks by asset value and operates through six business segments. It has both life and non-life business arms. According to market watchers, the group is vying for Prudential Life Korea to add to its insurance portfolio – particularly after Shinhan Financial’s acquisition of ING Life Insurance in early 2019.
At the time, ING Life was Korea’s fifth-largest life insurer; they have now been rebranded as OrangeLife.
At the shareholders meeting on March 20, Yoon Jong-gyu, group chairman of KB Financial reconfirmed their commitment to push forward their life business. Yoon said: “Life insurers carry a higher price-to-book ratio than banks in markets with zero interest rate, like Europe. Challenging times often provide new opportunities and insurance would make a good business.”
In response to potential challenges, Yoon noted that a takeover of Prudential Life Korea would lead to a higher valuation of KB Financial.
Should the deal ultimately go through this week, it could be the country’s largest acquisition deal of the year.
It would be a positive sign for dealmaking and business activity in South Korea, set amidst a difficult economic backdrop due to the Covid-19 crisis, which has impacted market players from SMEs to chaebol corporations to the Kospi.
- March 26
The US$2.7bn acquisition for Genworth Life has had years of regulatory hold ups.
- March 18
Mega broker tie-up will squeeze client choice in Asia - especially in re broking.
- March 11
The move could generate over US$1bn and the firms could be snapped up by global players.
- March 11
Overall there is an upbeat sentiment to the proposed deal.