By Lee Seung-hoon, Kang Woo-seok and Lee Ha-yeon | Pulse | March 11, 2020
Woori Financial Group and MBK Partners are in discussion to jointly bid for midsized insurer Prudential Life Insurance Co. in a $2 billion deal and pose a formidable contender to sole plausible candidate KB Financial Group.
They are reportedly fine-tuning detailed contract terms for the bid, according to industry sources on Tuesday.
The mega deal led by Goldman Sachs, one of the hottest for this year in Korea, closes tender on March 19.
Confirmed candidates taking part in the tender are KB Financial Group, MBK Partners, IMM Private Equity and Hahn & Company.
The Woori Financial Group-MBK Partners would surface as a strong candidate as the financial group would be able to provide financial resource. Woori Financial Group opted out in the preliminary bid earlier, but market analysts have not entirely ruled out its entry because it is the only one of the country’s top four financial groups without a sound insurance unit.
This is not the first time Woori Financial Group and MBK Partners have partnered for an M&A deal. They joined forces to acquire a 79.83 percent stake in Lotte Card for 1.38 trillion won ($1.16 billion) last year. MBK Partners holds a 60 percent stake in the card issuer while Woori Bank, a lender under the financial group, owns 20 percent. The lender also lent funds to MBK Partners to win the race.
The intensified race could up the value of Prudential Life to maximum 3 trillion won.
KB Financial Group still maintains a lead in the tender due to its will to expand its insurance business through M&A after it failed to join a race for ING Life Korea last year due to opposition from the board.
The loss cost KB Financial Group No.1 title to Shinhan Financial Group, which bulked up in size and profit with the acquisition of ING Life, Korea’s fifth-largest life insurer that has now been rebranded to OrangeLife. It has own life insurance unit KB Life Insurance, which only stands at 17th nationwide with less than a 1 percent share in the group’s total net profit.
KB Financial Group Chairman Yoon Jong-gyu in the shareholders’ meeting last year suggested strengthening its life insurance business on its portfolio, stressing the importance of timely and aggressive actions.
Woori Financial Group also has been active in beefing up the non-banking business. Since the transition into a holding entity last year, it has acquired two asset management firms, one real estate trust firm and a 20 percent stake in Lotte Card. Its top priority this year is to add a securities firm but it also is showing great interest in insurance business.
Sohn Tae-seung, chairman of Woori Financial Group, recently vowed to step up efforts to diversify the group’s portfolio also by adding not just small capital firms and savings banks but also major securities firms and insurers.
On Wednesday, Woori Financial Group shares closed 0.82 percent higher at 8,570 won, and KB Financial Group 0.43 percent up at 35,300 won in Seoul.