PE-backed Tongyang Life remains in hunt for Korea's LIG Insurance
Tongyang Life Insurance, a South Korean insurer majority-owned by Vogo Investment, has submitted a binding bid for a controlling stake in LIG Insurance.
The company confirmed its continued participation in the auction via a regulatory filing. Lotte Shopping and KB Financial Group also said they had submitted bids for the asset, which could be worth at least KRW400 billion ($373 million). A preferred bidder will be chosen by early June, according to reports.
Initial bids were accepted in March and six groups were shortlisted. In addition to Tongyang, Lotte and KB, there were said to be a consortium of the Korean Federation of Community Credit Cooperatives and two private equity investors, MBK Partners and Jabez Partners.
A number of shareholders in LIG Insurance are looking to sell a 21% stake in the business, including management control. The proceeds will be used to reimburse investors who lost money on commercial bonds issued by LIG Engineering & Construction, an affiliate of LIG Insurance that entered debt restructuring in 2011.
A PE consortium led by STIC Investments last year picked up a 49% stake in aerospace and defense company LIG Nex1, also as part of parent company LIG Group's efforts to service debts and refocus on core business activities.
LIG Insurance is Korea's fourth-largest property and casualty insurer after Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance and Dongbu Insurance. It has more than KRW2 billion in assets and posted a net income of KRW164.4 billion in 2012, down from KRW198.4 billion the previous year.
Vogo bought 17% of Tongyang in 2006 on the condition that it would get first refusal on any further sale. This happened in 2010 and Vogo's stake rose to 64%.
Tongyang and Vogo last year entered into exclusive negotiations with ING over the latter's Korean life insurance unit. However, the deal fell through and the asset was subsequently bought by MBK for approximately KRW1.84 trillion.
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