KB Financial Group has emerged as the strongest contender in the preliminary race for Prudential Life Insurance Co., but with the possibility still open for a later entry by Woori Financial Group in the near $2 billion contest over the midsized insurer.

Five candidates submitted their preliminary bids for Prudential Life, Korea’s 11th largest life insurer by assets, according to investment banking sources Thursday. They included KB Financial Group, Taiwan’s Fubon Financial Group, and Korea’s three private equity majors – Hahn & Company, IMM Private Equity and MBK Partners. Woori Financial Group and Hana Financial Group did not join the bid contrary to expectations.

The 100 percent stake sale of Prudential Life, estimated to cost at least 2 trillion won ($1.73 billion), is being led by Goldman Sachs. The shortlist is due out next week, with the final bid to take place mid-February.

KB Financial Group had gathered its forces early on by tapping JP Morgan for financial advice and Deloitte Anjin for accounting guidance. IMM PE has teamed up with Morgan Stanley and MBK Partners with Credit Suisse. Hahn & Company is said to have just sought actuarial advice at a foreign consulting firm.

The strongest contender is KB Financial Group, which has been eager to bulk up in size by bolstering its non-banking units. When combining Prudential Life with KB Life Insurance Co., which stands 13th domestically by assets, its ranking will automatically jump to fifth, putting it in a better position to reclaim its seat as the country’s leading financial house. It lost that title to Shinhan Financial Group last year in terms of net income following its rival’s acquisition of ING Life Korea, Korea`s No. 5 life insurer that has now been rebranded to Orange Life. As of July-September 2019, KB Financial Group had 545 trillion won in consolidated assets, with Shinhan holding 506 trillion won.

Among the private equity players, MBK Partners is said to be the most formidable, with a proven track record in the sale and acquisition of insurers. It successfully sold its 59.15 percent stake in Orange Life to Shinhan Financial Group last year for 2.3 trillion won.

IMM PE and Hahn & Company have in recent years expressed interest in Korea’s life insurance market and have been on a hunt for potential deals.

While Woori Financial Group opted out in the preliminary bid, analysts have not entirely ruled out its entry, as it is the only one of the country’s top four financial groups without an insurance unit. One of the private equity bidders is also said to have reached out to Woori to form a consortium, according to sources.

Hana Financial Group reportedly lacks the wherewithal to pursue another deal. Last year, it closed a 150-billion-won deal to acquire The-K Non-Life Insurance. It also put up 1 trillion won to become the No. 2 shareholder of the Bank of Investment and Development of Vietnam, one of Vietnam’s top four state-owned lenders.

By Kang Woo-seok, Park Jae-young and Kim Hyo-jin

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