By Han Woo-ram and Cho Jeehyun | Pulse | March 25, 2020
Korea’s KB Financial Group has gained a lead in the horserace over mid-sized insurer Prudential Life Insurance Co. upon reportedly handing the highest bid of 2.2 trillion won ($1.8 billion).
According to sources close to the affair, KB Financial Group has offered to pay 2.2 trillion won for the full stake in Prudential Life, outbidding other contenders – private equity firms Hahn & Company and IMM Private Equity whose bids stopped at around 1.5 trillion won.
The value of the insurer jumped from 2 trillion won to maximum 3 trillion won due to competition.
On Wednesday, KB Financial Group stock gained 9.78 percent to 32,000 won.
KB Financial has emerged as the strongest candidate to become the preferred bidder for Prudential Life, Korea’s 11th largest life insurer by assets. U.S.-based Prudential Financial Inc. fully owns the Korean life insurance unit through Prudential International Insurance Holdings and hired Goldman Sachs to lead the stake sale of the Korean unit. The results will be out this week.
KB Financial Group, eager to bulk up in size by bolstering its non-banking units, has been the formidable contender for Prudential Life from the very beginning. It hopes to combine KB Life Insurance Co., the 13th largest in Korea, and Prudential Life to jump to the country’s No.5, which would help it reclaim the leading financial house position that was lost to Shinhan Financial Group last year.
KB Financial Group Chairman Yoon Jong-gyu at the general shareholders meeting on March 20 reaffirmed his strong determination to scale up life insurance business. “Life insurers carry a higher price-to-book ratio than banks in markets with zero interest rate, like Europe,” said Yoon. “Challenging times often provide new opportunities and insurance would make a good business,” he added.