The Financial Services Commission (FSC) has said that a private equity firm (PEF) that Korea Development Bank (KDB) set up in March 2010 with Consus Asset Management to acquire the life insurer is not subject to the Financial Holding Companies Act, which bans a PEF from owning a financial services firm for more than a decade.
The FSC said that KDB-Consus Value private equity fund’s total assets did not exceed KRW500bn ($408m) at end-2019. The KRW500bn mark is the minimum threshold for financial holding companies to be recognised as a shareholder of an insurer under the Act, reported The Korea Herald. The FSC said that it had verbally informed KDB of its interpretation of the law.
The private equity firm jointly created by KDB and Consus Asset Management — which controls a combined 92.73% of KDB Life — reached the end of a 10-year period before being regulated as an insurance holding company in February.With the clarification received, a KDB spokesperson said it would focus on efforts to divest the insurer, adding the due diligence of preliminary bidders is underway.
KDB put the unit up for sale last September, and had intended on selecting a preferred bidder by the end of 2019. This is KDB’s fourth attempt to sell the insurer since 2014.KDB and Consus Asset in 2010 teamed up to buy what was formerly known as Kumho Life Insurance for KRW650bn.