Goldman Sachs, the lead manager for sale of Prudential Life Insurance, disclosed the list of bidders for the insurer on March 19. The list included KB Financial Group, private equity (PE) fund Hahn & Company and IMM PE.
Market watchers say that the actual sale price of the insurer may significantly fall from a previously predicted price. "The price estimated by the seller in the preliminary bidding was around 3 trillion won,” said an industry insider. “But the final price may drop significantly to around 2 trillion won due to a recent cut in interest rates stemming from the novel coronavirus outbreak."
Financial Group, which is regarded as the strongest acquisition candidate, recently raised 700 billion won by issuing subordinated bonds and new equity securities (permanent bonds). The group has around 800 billion won at its disposal, including its cash holdings of about 100 billion won.
Korea's two leading private equity funds — Hahn & Company and IMM PE — are moving to strengthen their financing capability. Hahn & Company is reportedly discussing acquisition finance with NH Investment & Securities, and IMM PE has already struck a deal with Woori Bank to arrange acquisition finance.
Woori Financial Group is considered to be a dark horse in the acquisition race. It is expected to come forward at the 11th hour by concluding a consortium with IMM PE or MBK Partners, which are major candidates in the acquisition competition. Woori Financial Group has connections with these private equity funds. IMM PE is currently an oligopolistic shareholder of the financial group with a seat on its board. MBK Partners previously partnered with Woori Financial Group in acquiring Lotte Card.
Meanwhile, Prudential Life Insurance ranked 11th in the Korean insurance industry as of the end of June in 2019 with 20,193.8 billion won in assets. Its ROA came in second, and its RBC first among insurers. The RBC rate indicates whether an insurer can pay insurance money to those insured on time. Prudential Life Insurance's net assets stood at 3,126.7 billion won at the end of the third quarter of 2019.