Vogo to sell down part of its Tong Yang Life Insurance holding
Vogo Investment is planning to sell down part of its 61% stake in Tong Yang Life Insurance, a subsidiary of mid-size South Korean conglomerate Tong Yang Group.
The fund is approaching domestic and overseas investors with a view to unloading 18% of its stake in the company, Bloomberg reported, citing The Korea Economic Daily. Vogo initially invested in Tong Yang Life Insurance in 2006, taking a 17% stake. It acquired a further 46.5% of the firm in November 2010 for KRW900 billion ($798 million).
Speaking to AVCJ at the time of the second deal, Jason Shin, managing partner at Vogo Fund, observed that a number South Korean conglomerates were looking to divest non-core assets in order to deleverage and restructure their organizations. He added that prices had become much more reasonable than before the global financial crisis, when a number of domestic strategic investors undertook highly leveraged deals.
Investing in South Korean financial assets is not easy, particularly when state ownership is involved. Woori Financial Group, the bank taken over by Korea Deposit Insurance Corp. (KDIC) in 2001 as financial institutions struggled in the aftermath of the Asian Financial Crisis, is a case in point. Several attempts by KDIC to divest its $6 billion stake have failed, most recently in September when Vogo and Tstone Corp. dropped out of the auction leaving MBK Partners as the sole bidder.
The discomfort with private equity participation in financial services is colored by experience. The Carlyle Group and Newbridge Capital joined Lone Star in buying up distressed Korean banks after the Asian financial crisis. They profited handsomely but - deserved or not - came to be seen by the public as financial opportunists who took advantage of Korea during a period of difficulty.
Insurance, however, could claim to be the one bright spot. Earlier this year, Japanese financial services group ORIX Corp. managed to buy 21.1 million shares in Mirae Asset Life Insurance, Korea's fifth-largest insurer, for KRW300 billion. ORIX made the investment through a dedicated private equity fund that has several Korean institutions among its investors, thereby easing regulatory concerns.
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