Korea Life makes final bid for Vogo’s stake in Tong Yang Life
Korea Life Insurance has submitted a final bid for Vogo Investment’s controlling stake in Tong Yang Life Insurance. Vogo is seeking to exit 60.7% of its 64% interest in the business in order to capitalize on the scarcity value of a controlling stake in a Korean insurer coming onto the market.
Korea Life announced its bid in a statement to the Korea Stock Exchange. According to domestic media, Prudential Financial, the second-largest insurer in the US, has also made an offer for the company.
The Tong Yang Life stake is worth about KRW989 billion ($875 million), based on its current market value. It is said that Vogo's target selling price is in the region of KRW26,000 per share, a considerable premium to Friday's close of KRW15,150.
Sources familiar with the situation told AVCJ earlier this year that Vogo expects to see an IRR of at least 20% on its initial investment. The IRR estimate relates to the approximate 17% stake in Tong Yang Life that was acquired by Vogo Fund I in 2006. It comes as Vogo continues fundraising efforts for what will be its third vehicle, which has a target of $650 million.
Vogo Fund II was a project-specific vehicle created in 2010 to purchase a controlling stake in the insurer. When Vogo first invested in Tong Yang Life it was conditional on the private equity firm getting first refusal on any future sale of more than 30% of the company. This duly happened in late 2010, and Vogo picked up an additional 46.5% holding for KRW900 billion. One third of the sum was covered by leveraged financing.
Vogo's investment in the insurer was a classic case of a second-tier South Korean conglomerate being forced by creditors to divest non-core assets in order to finance debt repayments.
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