Pan-Asian private equity firm MBK Partners will acquire ING Korea, the wholly-owned life insurance business in South Korea, from parent company ING Group, which is committed to divesting half of its Asia portfolio by the end of 2013 following its 2008 bailout, according to a statement from ING Group.
ING will receive total cash proceeds of about KRW 1.84 trillion (€1.24 billion; $1.6 billion) from MBK, with ING continuing to hold an indirect stake of 10 percent worth €80 million.
MBK did not respond to requests for comment.
The transaction values ING Korea at 9.2x its 2012 fiscal year earnings and 0.73x book value as of 31 March 2013. It is expected to result in an after-tax loss for ING Group of about €950 million, to be booked in the third quarter of 2013, according to a statement from the Netherlands-based business.
The pair has also reached a licensing agreement allowing ING Korea to operate under the ING brand for a maximum period of five years, the statement said.
I am convinced that with the support of MBK Partners, ING Life Korea will continue to grow its customer offering and build on its position as the fifth-largest insurance company in the Korean market. Through its 10 percent stake, ING will be able to benefit from that growth potential.
Jan Hommen, CEO, ING Group
“This transaction is a major step in the divestment of our Asian insurance and investment management activities,”.said Jan Hommen, chief executive of ING Group, in the statement.
“I am convinced that with the support of MBK Partners, ING Life Korea will continue to grow its customer offering and build on its position as the fifth-largest insurance company in the Korean market. Through its 10 percent stake, ING will be able to benefit from that growth potential.”
Since its 2008 bailout, ING has been divesting a number of its offshore units, including those in Canada, Australia and New Zealand, and Latin America, as well as a large portion of its investment management activities in Asia.
The firm now must only sell its Japan unit in order to satisfy its agreement with European Union regulators to offload more than 50 percent of its Asia operations before the end of 2013, according to media reports.
MBK is not the only private equity investor taking advantage of opportunities in Korea’s life insurance sector. Last summer, Affinity Equity Partners, Baring Private Equity Asia and the Government of Singapore Investment Corporation acquired a 24 percent stake in Kyobo Life for $1 billion. The deal came just months after the Ontario Teachers’ Pension Plan invested $400 million into the Korean insurance company as its first direct investment in the country, Private Equity International reported earlier.
In April this year, MBK invested in Korean outdoor apparel company NEPA, reportedly for $520 million, and in February it bought Japanese coffee shop franchise Komeda Coffee from Advantage Partners.
MBK Partners is a pan-Asian private equity firm focused on buyouts in North Asia, including Greater China, Japan and Korea. The firm is currently raising its third private equity vehicle, which had raised $2.3 billion as of July 2013 and is expecting to reach its $2.6 billion hard-cap “vastly oversubscribed”, PEI reported earlier.