Blackstone Group LP (BX:US) is teaming up with Mark Wilson, the former head of AIA Group Ltd. (1299), and other investors in a bid for ING Groep NV (INGA)’s Asian insurance business, said two people with knowledge of the matter.
The group, which includes reinsurer Swiss Re (SREN) Ltd., may make an offer of 5 billion euros to 6 billion euros ($7.35 billion) by July 16, the deadline for final bids, said one of the people, who asked not to be identified because the process is private. ING agreed to divest its insurance and asset management operations before the end of 2013 as a condition of receiving state aid.
AIA, Korea Life Insurance Co. (088350), and Manulife Financial Corp. (MFC) also plan to bid for the ING insurance unit, three people with knowledge of the matter said. A sale to a company with existing insurance operations may have a greater chance of getting regulatory clearance in countries including South Korea, two people said.
“The nature of a financial investor is such that they will typically be looking to exit the business at a future date.” said Mark Kellock, a Hong Kong-based analyst at Barclays Plc. “There may be greater certainty from the regulators’ point of view if an insurance company, with a long-term commitment, is the buyer.”
ING, led by Chief Executive Officer Jan Hommen, opted to sell the Asian units separately from the European ones as Europe’s debt crisis damped prospects for divestments there. It is seeking at least $7 billion for the Asian business, people with knowledge of the matter said in March. Wilson, the ex-AIA chief who is also a former executive at U.S. insurer American International Group Inc. (AIG:US), would provide management expertise, said one of the people.
The Blackstone-led group may also be competing with bidders including Richard Li, son of Hong Kong’s richest man, the person said. Korea’s KB Life Insurance Co. was also among companies invited to make-second round bids, people familiar with the matter said May 31. It isn’t clear that the Blackstone-led group has any advantage in the bidding and no final decision has been made.
ING’s Asia life insurance operations are spread across the region, with larger businesses in Korea, Japan, Malaysia and Hong Kong, Credit Suisse Group AG analysts Arjan van Veen and Frances Feng wrote in a Feb. 14 report.
Richard Li sold his stake in Hong Kong insurer Pacific Century Insurance Holdings Ltd. to Fortis, the Belgian-Dutch financial-services company now called Ageas, in 2007. He acquired PineBridge Investments, a money-management firm, from AIG in 2010.
Richard Li’s father Li Ka-shing said in May he will offer his son financial support to build businesses outside of the family’s Cheung Kong Group of companies. His younger son is in talks with “several sizeable enterprises” for possible acquisitions, the 83-year-old billionaire said.
AIG, the insurer bailed out by the U.S. government, sold most of Hong Kong-based AIA in an initial public offering in 2010. Wilson was replaced at AIA after clashing with AIG CEO Robert Benmosche over how to divest the Hong Kong-based business, people familiar with the matter said at the time.
Officials at ING, Blackstone, AIA, Korea Life, Manulife, Swiss Re and a spokesman for Richard Li declined to comment on the sale process.
The sovereign debt crisis sweeping Europe has stalled dealmaking in the region as sellers can’t garner the prices they seek for assets and financing for buyers remains costly. Announced private-equity deals in Europe have dropped more than 50 percent to $56.8 billion so far this year compared with 2011, data compiled by Bloomberg show.
ING agreed to sell assets to help repay the Netherlands after receiving aid following the 2008 financial crisis. The Dutch company is also selling its asset management business in Asia, which may be worth about 500 million euros, according to an April 19 estimate by Hans Pluijgers, an Amsterdam-based analyst at Credit Agricole Cheuvreux.
Blackstone, run by Stephen Schwarzman, is the world’s biggest private-equity manager by total assets under management. The New York-based firm, created in 1985, has expanded businesses including its hedge fund, credit and real estate. Its advisory unit began working with AIG in 2008 to restructure its business and sell units after a government bailout of the insurance company prevented its collapse.
ING, which would prefer to sell the Asia unit as a whole, will entertain separate bids for operations in different countries, people with knowledge of the matter have said.
Taiwanese regulators in August 2010 rejected a $2.2 billion bid by a group led by Primus Financial Holdings Ltd. for AIG’s local operations, citing concerns about their financial capability and long-term commitment.
“Whoever the buyer is, at the end of the day, the regulators’ greatest interest is the stability of the business and policyholders’ protection,” said Kellock.
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