Manulife Financial Corp and AIA Group Ltd are among companies that were invited to make second-round bids for ING Groep NV’s Asian insurance business, four people with knowledge of the matter said.
Korea Life Insurance Co and KB Life Insurance Co were also put on the so-called shortlist of companies that can make binding offers, said the people, who declined to be identified because the process is confidential.
ING, under EU orders to divest its insurance and asset management operations before the end of next year as a condition of state aid, is seeking at least US$7 billion for the business, people with knowledge of the matter said in March. The company, led by CEO Jan Hommen, opted to sell the Asian units separately from the European ones, as the region’s debt crisis damped prospects for divestments there.
The sale might result in cash proceeds for ING of about 4.6 billion euros (US$5.7 billion) after payment of debt, according to an estimate from Rabobank International analyst Cor Kluis on May 10.
The Korea Economic Daily earlier yesterday reported that Korea Life and KB Financial Group Inc, the owner of KB Life, were on the bidding shortlist. Korea Life is interested in ING’s Southeast Asian business, one person said.
The Dutch company is also selling its asset management business in Asia and has invited potential buyers, including Manulife, to make second-round bids, three people with knowledge of the matter said this week. The business is worth about 500 million euros, according to an April 19 estimate by Hans Pluijgers, an Amsterdam-based analyst at Credit Agricole Cheuvreux.
ING’s Asia insurance operations are spread across the region, with larger businesses in Korea, Japan, Malaysia and Hong Kong, Credit Suisse Group AG analysts Arjan van Veen and Frances Feng wrote in a Feb. 14 report. AIA is “best-placed to absorb” ING’s insurance operations outside of Japan and South Korea.
An AIA acquisition of ING’s non-Japanese business “would lead to a significant geographical footprint expansion,” strengthening AIA’s businesses in weak areas such as Korea and solidifying its positions where it is already strong, such as in Hong Kong and Malaysia, they added. It could also improve its bancassurance networks and skill set, they said.
The potential acquisition would lift AIA’s market share in Hong Kong to No. 1 from second place, and catapult its South Korea ranking to fourth from 10th, the Hong Kong-based analysts said.
Asia and wealth management are the two biggest opportunities for Manulife to expand, CEO Donald Guloien said in a telephone interview earlier this month. The Canadian insurer, which has operated in Asia for 115 years, has bolstered operations there through joint ventures, acquisitions and expanding its teams of agents and brokers.
Few companies are as well-positioned as Canada’s largest insurer to benefit from Asia’s doubling of its middle-class population over the next decade, Guloien said. Manulife’s growth potential in Asia is about twice the pace of GDP expansion in the area, he added.
AIA’s Hong Kong-traded shares have risen 4 percent this year, outperforming the 0.5 percent increase in the Hang Seng Finance Index.