ING Groep NV
) is set to vend 90% stake of its South Korean insurance arm to
private equity firm MBK Partners. The deal, which is subject to
regulatory approval, is estimated to be worth approximately $1.5
ING Groep and MBK Partners are yet to ink the agreement. However,
on completion, the deal will give MBK Partners the authority to
use ING Groep's brand name for the next three years.
Additionally, it will be the largest insurance agreement in South
Korea, beating the $1 billion purchase of 24% stake in Kyobo Life
Insurance Co. last year by an association led by private equity
firm Affinity Equity.
In compliance with European regulators, ING Groep was seeking to
offload more than half of its Asian assets, including the
Japanese, Hong Kong and Thai insurance units by the end of this
year. With the successful agreement to vend off the South Korean
business, ING Groep is close to fulfilling the regulators'
criteria and has only its Japanese insurance arm left for
ING Groep is aiming at divesting its Asian assets, especially its
insurance and investment-management businesses, by the end of
2013. This is mainly for the repayment of $13 billion state
financial aid, which the company received from the Dutch
government during the financial crisis of 2008. The company also
plans to vend its banking assets to accelerate repayment of the
remaining amount of roughly $3.9 billion with premiums.
The sale of the South Korean insurance operations will be one of
the major deals in line with the company's plan to divest its
Asian assets. In Oct 2012, it had announced a deal to vend its
lucrative Malaysian insurance business to Asian insurance giant
AIA Group Ltd. for approximately $1.7 billion.
Apart from this, ING Groep announced the divestiture of its
insurance business, pension and financial planning divisions in
Hong Kong and Macau, as well as its life insurance operations in
Thailand to Pacific Century Group for a total of $2.14 billion in
In the same month, the company had announced a deal to sell its
entire stake in China Merchants Fund (CMF) to the joint venture
partners of the fund, namely China Merchants Bank and China
Merchants Securities Co. Ltd. In Nov 2012, ING Groep announced
the sale of its lucrative Thailand Asset management business to
Singapore's United Overseas Bank Ltd.
Other Global Divestments
Apart from selling its Asian businesses, ING Groep has offloaded
a couple of its other global businesses in the past year to
streamline operations and focus more on core banking activities.
Last week, it agreed to sell ING Direct UK - its British online
banking division - to U.K. banking giant
In Aug 2012, ING Groep announced the sale of ING Direct Canada -
the Internet banking division of ING Bank of Canada - to
The Bank of Nova Scotia
). Further, in Feb 2012, it completed the sale of its online
banking unit, ING Direct USA, to
Capital One Financial Corp.
We believe that the closure of such deals will help ING Groep to
repay the bailout funds to the government. Further, it will help
the company to pay more attention to its core businesses amid a
bleak macroeconomic environment.
ING Groep currently carries a Zacks Rank #3 (Hold).
BARCLAY PLC-ADR (BCS): Free Stock Analysis
BANK OF NOVA SC (BNS): Free Stock Analysis
CAPITAL ONE FIN (COF): Free Stock Analysis
ING GROEP-ADR (ING): Free Stock Analysis
To read this article on Zacks.com click here.