Sale of ING Life Becomes More Complicated with a Rumor of Tongyang Life Selloff

As there is a rumor that Tongyang Life Insurance Co. will be put on the market for merger and acquisition (M&A), it is expected to act as a big variable in the sale procedure of ING Life Insurance Korea Ltd.

According to investment banking (IB) industry sources on May 9, Tongyang Life, which was acquired by China’s Anbang Insurance Group is highly likely to be put up for sale in the M&A market in less than three years. This can signal a considerable change in the sale procedure of ING Life.

Tongyang Life said in a regulatory filing on the 8th, “The Chinese government is reviewing and analyzing the overseas assets held by the biggest shareholder Anbang but nothing has been decided yet.”

The industry believes that Anbang hasn’t made a final decision on whether to sell Tongyang Life or not but the company is most likely to be put up for sale.

As there is also a growing possibility that another large company in the insurance industry will be up for sale, MBK Partners, which has been seeking to sell ING Life Korea, is under a difficulty. MBK Partners has a 59.15 percent stake in ING Life Korea worth 2.1 trillion won (US$1.94 billion) and the selling price of ING Life Korea is estimated at 2.5 trillion won (US$2.31 billion) considering its management premium. However, financial groups say the price of ING Life Korea is way too high. In fact, Shinhan Financial Group, which recently conducted due diligence on ING Life Korea, also said the highest acquisition price is less than 2 trillion won (US$1.85 billion).

MBK Partners said it would not sell ING Life Korea in a hurry since it withdrew most of its acquisition funds through dividends, initial public offering (IPO) and recap.

However, the right to use the brand of ING Life ends by the end of this year and there is no time for MBK Partners to relax because it has to offer high returns to its investors due to the nature of private equity fund. Accordingly, MBK Partners will be in a very disadvantageous position as Toyang Life, which is similar with ING Life Korea in terms of assets, is highly likely to be put up for sale.