Korea's KDB to sell off its life insurer for fifth time

South Korea’s state-run Korea Development Bank (KDB) is poised to accelerate the selling off of its affiliate KDB Life Insurance Co. next week. One of the potential buyers is Cactus Private Equity, which acquired Ssangyong Motor Co. in August jointly with KG Group and Pavilion Private Equity, according to market sources.   

KDB Life’s two key shareholders, the bank and Consus Asset Management Co., have recently picked Samil PricewaterhouseCoopers as the lead manager and EY Hanyoung as the accounting advisor.

The parent bank attempted the sale of the insurance affiliate four times between 2014 and 2021. During the latest attempt, Korean PE firm JC Partners signed a share purchase agreement (SPA) to buy a 92.7% stake in the insurer from the bank in June 2021 and was set to complete the deal by early this year.

But the deal fell through as the PE firm didn’t receive approval from Korea’s Financial Services Commission to be a financial services firm’s major shareholder by Jan. 31, the deadline for JC Partners’ share purchase agreement (SPA) transaction to have cleared.

At a press conference in September, KDB Chairman Kang Seok-hoon said the financial circumstances are ripe to sell off the insurer thanks to rising interest rates, hinting at the acceleration of the sale procedure.

KDB was expected to resume the disinvestment procedure as Kim Hee-tae was inaugurated as KDB Life’s senior vice president on Nov. 4, market sources said. Kim, who served as CEO of the now-defunct Woori Aviva Life Insurance Co. for two years from 2011, led the sale of the insurer to Korea’s DGB Life Insurance Co. in September 2013.

Including Cactus Private Equity, another firm is known to be interested in taking over KDB Life. Other than the two firms, Korea’s Woori Financial Group may join the race to acquire the insurer as it is the only Korean financial holding group that doesn’t own a life insurer.

KDB Life's total assets and equity reached 20.49 trillion won ($15.1 billion) and 891.8 billion won, respectively, as of end-2021.

In the red between 2017 and 2018, the insurer swung to 21.6 billion won in net operating profit in 2019. It posted 11.8 billion won and 23.2 billion won in net profit in 2020 and 2021, respectively. The firm is set to prepay its perpetual corporate loan of $200 million by next year.

Write to Ji-Hoon Lee at lizi@hankyung.com
Jihyun Kim edited this article.