이 기사는 2020년 05월 11일 08:00 thebell 에 표출된 기사입니다.

South Korea's The-K Non-Life Insurance has changed hands first time in 18 years. With the acquisition, the insurer will become a subsidiary of Hana Financial Group.

The possibility of selling The-K Non-Life was first raised in the second quarter of 2019. The Korea Teachers’ Credit Union (KTCU) sent a request for proposal to accounting firms to hire a management consulting firm to estimate the insurer’s valuation in mid-August of 2019. The KTCU selected a firm through a presentation competition at the end of the month.

Market observers viewed the move as the KTCU’s preliminary work to make sure the possible sale of the insurer is appropriate, with the consulting firm suggesting options like selling the insurer in its research report. The KTCU, which had been under a lot of pressure to increase capital for its subsidiary, could partly solve the problem by selling the insurer.

The-K Non-life Insurance is fully owned by the KTCU, one of the country’s major institutional investors. The insurance company started as a car insurance company in 2003 and diversified its business to include comprehensive non-life insurance in 2014. Yet, the insurer has continued to be a small firm specializing in auto insurance, which has made the KTCU keep injecting money to its subsidiary by raising equity capital to 160 billion won through several rights offerings.

The KTCU ultimately decided to sell The-K Non-Life rather than shoulder an additional burden. The sale process accelerated with Samjong KPMG selected to handle the process and South Korean law firm Lee & Ko joining the deal as an advisor at the beginning of October.

The KTCU opened the virtual data room to potential buyers who submitted a letter of intent to acquire the insurer at the end of October 2019. At that time, several potential buyers who had interests in non-life insurance companies including Hana Financial Group were conducting preliminary due diligence on The-K Non-Life.

Some private equity firms put efforts into finding strategic investors in order to form a consortium before joining the race. To garner strong interest, the seller responded to each potential buyer individually instead of setting any specific date for the preliminary bid. Hana Financial Group completed the management presentation on the insurance company on November 7, 2019.

As BNK Financial Group and Woori Financial Group decided not to join the race, the sale process of the insurance company was changed to a private deal at the end of 2019.

With Hana Financial Group emerged as a prime candidate, the seller and the buyer focused on the negotiation. Though the two parties had different views on issues like the insurer’s valuation, they reportedly remained at the negotiation table to complete the deal.

“There was a tug of war between the two parties on whether Hana Financial Group will acquire 70 percent or 80 percent stake in insurer, but the deal didn’t fall through as both had strong will to complete the deal,” an industry source said.

At the end of January 2020, Hana Financial Group's board approved the group's acquisition of the non-life insurer' shares. In mid-February, Hana Financial Group had inked a stock purchase agreement with the KTCU to buy a 70 percent stake in The-K Non-Life Insurance for 77 billion won. The transaction value represents a price-to-book (P/B) ratio of approximately 0.7. Hana Financial Group has recently received the approval from South Korea’s Financial Services Commission (FSC) to incorporate the non-life insurer as its subsidiary, overcoming all major hurdles to complete deal.

The two parties struck the deal at such arapid pace on the back of Hana Financial Group’s strong will to beef up its non-banking business and its clear post-merger integration plan, industry observers said.

(By reporter Rho Ar-rum)