ING to sell Asia divisions to repay 2008 bailout

Thu, Aug 30, 2012, 01:00

ING IS exploring a separate sale of its roughly $1 billion Hong Kong insurance business, sources said, a move that could further complicate the auction of its Asian operations.

The Dutch insurer is selling its Asia divisions to repay a 2008 government bailout. It failed to secure a single buyer for the entire Asian group, valued at about $7 billion. As a result, ING decided to split the auction into three pieces – Japan, South Korea and South-east Asia.

The Hong Kong business was originally lumped in with Southeast Asia, together with Malaysia and Thailand. But with the south-east Asia sale making slow progress due to foreign ownership restrictions, ING is keen to expedite parts of the nearly six-month old process.

The sources, who declined to be identified as the discussions are confidential, cautioned that ING has not made a final decision.

While selling Hong Kong separately may extend the auction process for the Asia business, it could allow ING to extract better value from a buyer focused just on that specific market, sources said.

A successful Hong Kong sale may also allow ING the flexibility to accept lower offers for South Korea and Japan, which have received lukewarm response so far in the bidding.

A consortium led by Hong Kong’s Richard Li, the son of Asia’s richest man, Li Ka-shing, may prove to be a leading contender to buy just the Hong Kong portion from ING, one of the sources said. Mr Li previously ran an insurance business in Hong Kong, which he exited in 2007 by selling a controlling stake to Dutch and Belgian financial services firm Fortis. Pan-Asian life insurer AIA Group and Canadian insurer Manulife Financial are the leading contenders to buy ING’s south-east Asia operations, sources have previously said.

ING’s auction has put the Malaysian and Thai regulators in a bind as the two countries do not allow foreign insurers to buy 100 per cent of domestic insurance operations. ING launched businesses in the two countries before the regulations went into effect.

ING’s south-east Asian operations are valued between $2.5 billion and $3 billion, with Malaysia accounting for about two-thirds of the total value. – (Reuters)