MBK Partners to buy ING Life Korea for $1.65b
North Asia buyout firm MBK Partners has agreed to buy ING Group’s South Korean life insurance division for approximately KRW1.84 trillion ($1.65 billion) as the Dutch insurer continued its Asia divestment plan. ING will retain a 10% stake in the business and allow MBK to use the ING brand for up to five years.
The acquisition is set to become South Korea's largest insurance deal - and its fourth-largest private equity buyout - surpassing last year's $1 billion purchase of a 24% stake in Kyobo Life Insurance by an Affinity Equity Partners-led consortium.
Earlier this month MBK became the third party to enter into exclusive talks with ING, following KB Financial Group last December and a consortium comprising Tongyang Life Insurance and Vogo Investment in June.
"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% stake, ING will be able to benefit from that growth potential," Jan Hommen, CEO of ING Group, said in a statement.
The transaction is subject to regulatory approval and expected to close in the fourth quarter of this year. It values ING Life Korea at 9.2x earnings for the year ended March 2013 and 0.73x book value.
ING Group is expected to post a post-tax loss of EUR950 million ($1.27 billion) as a result of the deal, to be booked in the third quarter. The company's 10% stake in the business, to be held by subsidiary ING Insurance, has been allocated a valuation of KRW120 billion.
According to Reuters, MBK will finance the deal through a KRW1 trillion syndicated loan.
Established in 1987, ING Life Korea is the country's largest foreign life insurer, with about 1.3 million customers, more than 1,000 employees and approximately 6,800 tied agents.
ING is on a deadline to sell more than 50% of its Asian operations by the end of 2013, as part of the conditions tied to a EUR10 billion state bailout agreement from 2008. It can exit the remaining interests by the end of 2016. With the ING Korea Life deal, only the Japanese insurance is still to be sold out of the Asian assets marked for divestment.
MBK, which has 20 investee companies in its portfolio and total assets under management of more than $8 billion, is currently raising its third fund to be invested in South Korea, Japan and Greater China. The vehicle had an initial target of $2.25 billion but is expected to exceed this figure.
In January, MBK acquired a controlling interest in Japanese coffee shop chain Komeda from Advantage Partners for an undisclosed sum. Previous reports stated that Advantage was seeking more than JPY40 billion ($448 million).
At the end of last year, MBK completed the protracted acquisition of a significant minority stake in water purifier manufacturer Woongjin Coway for KRW1.2 trillion ($1.1 billion) deal. The deal was put on hold after Woongjin Holdings, Coway's parent company, applied for court receivership.
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