North Asia-focused private equity firm MBK Partners is on its way to partially exiting its investment in ING Life, the South Korean life insurance unit of Dutch insurer ING Group, after almost a year of delays.
ING Life applied for initial public offering (IPO) approval from the Korea Exchange in February and last week received approval, the Korea Exchange said in a statement.
ING has been eyeing a listing on Seoul’s main board, the KOSPI, since last year with media reports suggesting the firm expects to raise more than $1 billion in the initial public offering.
MBK bought 90 percent of ING Group’s life insurance unit in South Korea for a total purchase price of KRW 1.8 trillion ($1.4 billion; €1.3 billion) in August 2013 through its third fund, $2.7 billion MBK Partners Fund III. MBK reportedly financed about KRW 880 billion while institutional investors including KB Financial Group, Woori Investment & Securities and Hana Daetoo Securities provided syndicated loans worth around KRW 800 billion.
MBK Partners was planning to sell the stake to Chinese companies in May last year. However, the plan was delayed when Chinese investors including China Life Insurance, China Taiping Insurance and Fosun signalled cold feet amid political tensions between China and South Korea after the Korean government decided to allow the dispatch of the US Terminal High Altitude Area Defense system on the peninsula.
According to MBK’s 2015 annual letter, the firm has so far returned capital to its investors from the deal through a leveraged recap of $119.8 million, for a 0.32x MoE and 42.7 percent internal rate of return.
Under MBK Partners, ING Life’s operating profits doubled from KRW 253.7 billion in 2013 to KRW 407.9 billion in 2015. The company, with nearly KRW 40 trillion in assets as of end-September 2016, is South Korea's fifth-largest insurer based on assets.
Morgan Stanley and Samsung Securities are advising on the deal.
Established in 2005, MBK is Korea’s largest private equity firm with $10.1 billion in assets under management. Earlier this year, the firm exceeded its $3.5 billion target for its fourth buyout fund, amassing $4.1 billion in just two months.
Earlier this month, MBK acquired South Korea’s largest specialist gas producer Daesung Industrial Gases from a Goldman Sachs-led investor group.
MBK could not be reached for comment by press time.