Korean insurer's high asking price may be turning away potential buyers

ING Life Insurance Korea’s expensive price tag is reportedly preventing potential buyers from pushing through with the transaction, which is likely to be the largest M&A transaction in the market.

MBK Partners, the top shareholder in the insurer, has said that it plans to complete the sale by the end of 2018, but prospective buyers such as Shinhan Financial Group and KB Financial Group have backed out, reports Business Korea. This could mean that MBK may not meet its self-imposed deadline.

According to the report, Shinhan, which previously showed interest in acquiring ING Life Insurance Korea, was turned off by the high prices placed on the insurer. The insurer’s market capitalization is at almost KRW3.5 trillion (US$3.1 billion), but Shinhan said that it is only willing to shell out KRW2.5 trillion due to MBK Partners' stake (59%) and management right premium.

Furthermore, the insurer has several uncertainties attached to its acquisition. While its risk-based capital ratio remains the highest in the market, it will need an infusion of additional capital in order to meet incoming insurance accounting standards IFRS 17 and K-ICS.

Experts believe that ING Life Insurance Korea’s M&A deal will push through once its share prices have fallen to an appropriate level.

“Currently, the selling price is too high,” a senior official of the Shinhan Financial Group was quoted as saying by Business Korea. “If the total acquisition price falls below KRW2 trillion (US$1.8 billion), we will be able to participate in the takeover of the life insurer.”