The Largest M&A in Korean Insurance Industry
Shinhan Financial Group will buy ING Life, Korea's sixth-largest life insurer, at about 2.4 trillion won (US$2 billion).
Industry sources said on August 13 that Shinhan Financial agreed with MBK Partners, a private equity fund (PEF) management company, to acquire 59.15% stake of ING Life. The acquisition price per share is reportedly about 50,000 won (US$41.6) and the total price is 2.4 trillion won. It is the largest ever merger and acquisition (M&A) in the domestic insurance industry.
Shinhan Financial Group plans to report the acquisition of ING Life to the board of directors, which is scheduled to meet on August 16-17.
When Shinhan Financial Group completes its acquisition of ING Life, it will retake the top position among domestic financial groups in terms of net profit, overtaking KB Financial Group. Shinhan Financial maintained its position as the number one financial group since 2011, when the Korean banking industry introduced IFRS. It lost No. 1 position to KB Financial for the first time last year. Shinhan Bank recorded a net profit of 1.88 trillion won (US$1.6 billion) in the first half of last year, lagging behind KB Financial Group, which posted 1.45 trillion won (US$1.2 billion). In the first half of this year, KB Financial Group was still in the top position (1.91 trillion won, US$1.6 billion), beating Shinhan Financial Group (1.18 trillion won, US$0.98 billion).
If Shinhan Financial Group buys ING Life, which generates 340 billion won (US$283 million) a year in net profit, it is expected to take over KB Financial Group. The acquisition is also expected to allow Shinhan Financial to diversify its business structure, which is focused on banking and credit card. The two businesses accounted for 90.8% of the group’s net profit of 2.9177 trillion won earned last year.