CHINA’S Anbang Insurance Group is finalizing the purchase of a controlling stake in Tong Yang Life Insurance Co. for about US$1 billion, its first deal in South Korea and one that may serve as a springboard for the acquisitions of other financial firms in the country.

    An announcement is expected today, a source with direct knowledge of the matter said, declining to be identified. Anbang, Tong Yang, which has about 17.3 trillion won (US$15.8 billion) in mostly domestic assets, and its owner private equity firm Vogo Investment declined to comment.

    A deal would be the latest of several for China’s eighth-largest life insurer, which has been keen to expand its global footprint, even in South Korea where foreign financial firms have had a tough job competing against local rivals due to a saturated market and inflexible labor rules.

    The South Korean financial sector has, however, seen some merger and acquisition interest of late as struggling owners eager to improve their balance sheets have been willing to sell at cheaper prices than in the past, attracting buyers such as Japan’s Orix Corp. and Taiwan’s Yuanta Financial Holdings.

    The deal will be an all-share deal for 57.5 percent in Tong Yang, South Korea’s eighth-largest life insurer, valuing the stock at 17,750 won per share, the Korea Economic Daily reported.

    But shares in Tong Yang fell 7 percent to 11,700 won, with analysts saying retail investors were put off by Anbang’s relative lack of brand power and shorter management history.

    Tong Yang has been on the block since 2011. Vogo Investment first bought a stake in the insurer in 2006.

    Winning regulatory approval for the purchase would also make it easier for Anbang to buy other Korean financial firms, analysts said.

    “Tong Yang may be able to utilize Anbang’s Chinese networks as its seeks higher long-term returns,” added Won Jae-woong, an analyst at Yuanta Securities. He noted the Chinese insurer, which was only established in 2004, may also benefit from Tong Yang’s longer history in insurance. (SD-Agencies)