Reportedly, Australia-based Macquarie Group is the other shortlisted bidder. KB Financial Group, a South Korea-based financial services company, opted out of the bidding.
Prudential, which reported weaker-than-expected quarterly results, has been selling non-core assets following the global credit crisis. After the sale, it would be left with an insurance unit in Asia’s fourth-largest economy.
Due to deregulation in South Korea’s financial sector, domestic securities firms are expanding into asset management space to compete with banks. Acquiring Prudential’s Korea units is expected to help Hanwha Group secure new sales channels for products developed by Hanwha Securities and Korea Life through Prudential’s branches.
Joseph Shim, an analyst at Samsung Securities, said: “The deal is positive for Hanwha as it will boost its industry ranking, the number of branches and fund sales. But it doesn’t have enough cash for an acquisition of this size and would inevitably decide to borrow money, potentially from its group firms.”
However, Seo Boick, an analyst at Eugene Investment & Securities, opined: “Along with Korea Life Insurance’s IPO and its growing business, the (reported) acquisition is part of Hanwha Group’s big picture plan to grow its financial services business. Prudential’s business is focused on asset management, different from most of South Korean brokerage companies, so it has little business overlap with Hanwha Securities,” reported the news agency.
