SEOUL, Feb 16: China’s Anbang Insurance Group is finalising the purchase of a controlling stake in Tong Yang Life Insurance Co for about $1 billion, its first deal in South Korea and one that may serve as a springboard for the acquisitions of other financial firms in the country. An announcement is expected later on Monday or Tuesday, a person with direct knowledge of the matter told that declining to be identified as the person was not authorised to speak to the media. Anbang, Tong Yang and its owner private equity firm Vogo Investment declined to comment. A deal would be the latest of several for China’s eighth-largest life insurer which has been keen to expand its global footprint, even in South Korea where foreign financial firms have had a tough job competing against local rivals due to a saturated market and inflexible labour rules. The South Korean financial sector has, however, seen some M&A interest of late as struggling owners eager to improve their balance sheets have been willing to sell at cheaper prices than in the past, attracting buyers such as Japan’s Orix Corp and Taiwan’s Yuanta Financial Holdings.
The deal will be an all-share deal for 57.5 percent in South Korea’s eighth-largest life insurer valuing the stock at 17,750 won per share, the Korea Economic Daily reported. But shares in Tong Yang fell 7 percent to 11,700 won, with analysts saying retail investors were put off by Anbang’s relative lack of brand power and shorter management history. Tong Yang, which has about 17.3 trillion won ($15.8 billion) in mostly domestic assets, has been on the block since 2011. Vogo Investment first bought a stake in the insurer in 2006. Winning regulatory approval for the purchase would also make it easier for Anbang to buy other Korean financial firms, analysts said.
‘Tong Yang may be able to utilise Anbang’s Chinese networks as its seeks higher long-term returns,’ added Won Jae-woong, an analyst at Yuanta Securities. He noted the Chinese insurer, which was only established in 2004, may also benefit from Tong Yang’s longer history in insurance.
Deals by Anbang last year include the $1.95 billion purchase of New York’s Waldorf Astoria Hotel and the Belgian banking operations of Dutch insurer Delta Lloyd NV for 219 million euros. It also made a $2.7 billion bid for a controlling stake in South Korea’s Woori Bank – one that failed after no competing bid emerged as required by South Korean law. ($1 = 1,098.2000 won)
(AGENCIES)
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