AIA, Manulife crunch numbers as final ING bids loom

Sun Jul 15, 2012 5:28pm EDT
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By Denny Thomas and Clare Baldwin

HONG KONG (Reuters) - A wide range of suitors, from the son of Asia's richest man and a former rugby player in New Zealand to more established players including AIA Group (1299.HK: Quote) and Manulife Financial Corp (MFC.TO: Quote), are expected to submit binding bids on Monday for ING Groep's ING.AS Asia insurance business in a deal that could top $7 billion.

ING is selling its Asian life insurance and its asset management units in the region as it needs to repay bail-out funds it received from the Dutch government during the 2008 financial crisis. Since the bail-out, ING has sold 15.2 billion euros ($18.6 billion) worth of assets around the world.

ING CEO Jan Hommen scrapped a joint IPO of ING's Europe and Asia units in favor of an Asia sale about six months ago. Since then, the worsening euro zone crisis has put some potential buyers off big M&A bets. Metlife (MET.N: Quote) and Prudential Financial Inc (PRU.N: Quote), considered strong contenders for ING's insurance business, have dropped out of the process.

ING's Southeast Asian operations have generated the most interest, with Japan's Dai-ichi Life Co Ltd (8750.T: Quote), South Korea's KB Financial Group (105560.KS: Quote), Korea Life Insurance Co Ltd (088350.KS: Quote) and two groups expected to submit second-round bids for parts of the business, sources familiar with the process said, declining to be identified because discussions were confidential.

One consortium is led by ex-AIA CEO and a former rugby player Mark Wilson, backed by private equity firm Blackstone Group LP (BX.N: Quote) and Swiss Re SRENH.VX, while the other is headed by Richard Li, son of billionaire Li Ka-shing, which is likely to be interested only in the Hong Kong, Malaysia and Thailand businesses.

Wilson was in charge of AIA when it planned an initial public offering in 2009, but was replaced the following year after a failed bid for AIA by British insurer Prudential Plc (PRU.L: Quote).

There is some skepticism over either consortium having a chance of winning.

"It gets complicated when you bring a private equity fund into the picture," said Hong Kong-based Keefe, Bruyette & Woods insurance analyst Stanley Tsai. "They will need an exit strategy in the next two to three years, making the deal more difficult to execute from a regulatory standpoint."   Continued...