A slew of insurance giants are vying to acquire Dutch lender ING Groep N.V.'s (ING) Asian life-insurance arm in a bidding war that is expected to bring in a windfall for ING, according to media reports on Thursday. The last day to submit first round bids for the auction is said to be Friday. A deal could see a price tag of between $6 billion and $7 billion.
Most of them are looking to boost their operations in Asia, which is the currently the world's fastest-growing insurance market. The Asian market is currently dominated by AIA Group Ltd., partly owned by American International Group Inc. (AIG), and British insurer Prudential plc (PUK, PRU.L).
Four North American groups, MetLife, Inc. (MET) and Prudential Financial, Inc. (PRU) from the U.S. as well as Canada's Manulife Financial Corp. (MFC) and Sun Life Financial, Inc. (SLF), are said to be in the fray as potential bidders for the whole Asian assets. Others in the fray include, Switzerland's Zurich Insurance Group AG (ZFSVF.PK, ZURVY.PK) and Italy's Assicurazioni Generali SpA (ARZGY.PK).
Hong Kong-listed AIA Group is also said to be in the fray, but will reportedly bid only if it gets a partner to buy the troubled Japanese life-insurance operations. Meanwhile, Korea's KB Financial Group, Inc. and Korea Life Insurance Co. are said to be interested only in ING's South Korean life-insurance operations.
Private-equity firm J.C. Flowers & Co. has expressed interest in the bidding process and is seeking an insurer as a partner for a combined bid. Samsung Life Insurance had also shown interest, but decided Thursday to pull out of the race.
Meanwhile, ING has reportedly prohibited bidders from forming consortium's in the first round, but has allowed those who move into the second round of bidding to join hands.
Hong Kong-based ING's Asian life insurance operations consist of eight wholly owned or joint-venture businesses doing business in China, Hong Kong, India, Japan, Malaysia, South Korea and Thailand.
The proposed divestiture is a part of ING's ongoing asset sale in order to comply with an agreement reached with the European Commission while getting approval for a Dutch state aid during the financial crisis in November 2008.
ING received 10 billion euros from the Dutch State in November 2008 after it issued 1 billion core Tier 1 securities, but repurchased 5 billion euros of the securities in December 2009.
The proceeds from the divestitures will be used to repay the government aid. ING has already sold 15.2 billion euros worth of assets across the world.
The EU ordered ING to shrink its balance sheet by around 45 percent by 2013. The extensive EC restructuring requirements for ING Group also includes the actions that have been taken to separate Banking and Insurance in order to build strong businesses.
ING is reportedly to sell asset management and insurance operations in Asia separately. In January, ING dropped its plans for a initial public offering for its insurance and investment management businesses in Europe and Asia, citing the uncertain economic outlook and turbulent financial markets. However, the company said it will prepare for an IPO for the U.S insurance and investment management businesses.
ING closed Thursday's regular trading session at $5.76, down $0.27 or 4.48% on a volume of 4.69 million shares.
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