Anbang Adds $1 Billion Korean Company to its Conquests

By Ellen Huber

China’s state-owned Anbang Insurance Group Co. Ltd. has signed a memorandum of understanding to acquire a 57.5 percent stake in South Korea’s Tong Yang Life Insurance Co. for about 1.1 trillion Korean Won ($1.01 billion), according to Reuters. Anbang is reported to be purchasing the majority stake from South Korean private equity firm Vogo Investment.

Both Reuters and China Money Network report that neither Anbang nor Vogo could be reached to confirm the deal.

This deal continues Anbang’s heavy pursuit of overseas assets over the last year. Just this past December Anbang agreed to buy the banking unit of Dutch insurer Delta Lloyd NV for €219 million ($273 million).In October 2014, Anbang bought Belgian insurer Fidea from US private equity firm J.C. Flowers & Co. for an undisclosed price.

Also in October, Anbang agreed to buy New York City’s historic Waldorf Astoria Hotel from Hilton Worldwide Holdings Inc. for $1.95 billion—the largest acquisition of US real estate by a Chinese buyer and the most expensive purchase of a US hotel ever. On Monday, the Committee on Foreign Investment in the United States approved the purchase after considering possible security concerns, reports Reuter’s.

Also noteworthy is Anbang’s bid to buy South Korea’s $2.7 billion Woori Bank at the end of November 2014. That sale didn’t go through because at least two bidders were needed under local rules.

Anbang has also been bold in the Chinese market this past year. Among other hefty stakes in various banks and property developers around China, Anbang owns 20 percent of Minsheng Bank—China’s largest private lender—and is speculated to have its sights on a majority share, according to The Economist.

Anbang’s rapid acquisition of high-priced assets stands apart from most other Chinese insurance companies. Regulators require them to not only fund themselves with capital, but stick to non-risky, low-yielding investments—clearly not characteristic of Anbang’s recent activity.

After starting out in 2004 with just 50 million yuan ($60 million) in capital, Anbang is now one of the biggest Chinese firms, with hopes to grow even bigger. The Economist reports that Anbang’s chairman Wu Xiaohui—of significant political stature—plans to turn his firm into a conglomerate that combines insurance, banking, securities, and fund management. And if Anbang’s current capital standings is any indication, that goal is likely: Last year Anbang quintupled its capital when it raised 50 billion yuan ($8 billion) in just two rounds of private financing, totaling 62 billion yuan ($9.9 billion).

(Photo by sftrajan via Flickr)