Package deal covers both Acuon Capital and Acuon Savings Bank

PF headwinds ease as capital firms draw fresh interest across financial sector

Acquisition aimed at bolstering asset management capabilities

Merger of savings banks barred under current rules, requiring separate operations

The headquarters of Hanwha Life Insurance at the 63 Building in Yeouido, Seoul. [Hanwha Life Insurance]
The headquarters of Hanwha Life Insurance at the 63 Building in Yeouido, Seoul. [Hanwha Life Insurance]

Hanwha Life Insurance has been named the preferred bidder for Acuon Capital, the country's 17th-largest installment finance company by assets, and Acuon Savings Bank, the fifth-largest savings bank. If the acquisition goes through, Hanwha Financial Group will fill the last remaining gap in its lineup — a capital finance affiliate — having already built out subsidiaries in life insurance, non-life insurance, securities, asset management and savings banking.

Financial industry sources said Hanwha Life Insurance was notified Sunday by EQT Partners — the Swedish private equity fund and largest shareholder of Acuon Capital — that it had been selected as the preferred bidder. The stake on offer is EQT Partners' 96.06 percent holding in Acuon Capital. Because Acuon Capital owns 100 percent of Acuon Savings Bank, the two companies are being sold as a package. The acquisition price is expected to be around 1 trillion won ($648 million). "We have received notification that we have been selected as the preferred bidder," Hanwha Life Insurance said.

Three firms entered the preliminary bidding round — Hanwha Life Insurance, Meritz Securities and Baikal Investment — before the final round narrowed to a contest between Hanwha Life Insurance and Meritz. Meritz Securities had considered acquiring only Acuon Capital, excluding the savings bank, while Hanwha Life Insurance proposed buying both companies outright. Analysts say the seller likely found Hanwha Life Insurance's all-in offer more attractive, as it allowed the deal to close in a single transaction without the complications of a split sale.

Interest in capital finance companies has surged across the financial sector recently. Easing concerns over project financing exposure have turned once-avoided assets into sought-after targets, and profitability has also been demonstrated — combined net profit at the capital finance arms of the eight major financial holding groups jumped 34 percent year-on-year in the first quarter. Return on equity at top-tier capital finance companies exceeds 14 percent, well above the life insurance industry average of 8.61 percent for the same period. Banks including Kakao Bank and Suhyup Bank have also joined the hunt for capital finance firms, intensifying cross-sector competition for acquisitions.

Against that backdrop, Hanwha Life Insurance's pursuit of Acuon Capital is directly tied to its goal of strengthening asset management capabilities. Capital finance companies face fewer regulatory restrictions on asset management than banks or savings banks, allowing them to generate revenue across a broad range of activities — from mezzanine investments such as convertible bonds to financing for mergers and acquisitions. Acuon Capital is particularly well suited to that role: it holds total assets of around 9 trillion won and derives 98.4 percent of its loan portfolio from corporate lending, making it a specialist in corporate finance. The acquisition is expected to give Hanwha Life Insurance a foothold in areas that insurers cannot easily access directly.

The deal also holds promise for expanding Hanwha's savings banking business. Hanwha Savings Bank currently operates just two branches in Gyeonggi Province — its head office in Bucheon and a branch in Seongnam — but adding Acuon Savings Bank, which is licensed to operate in Seoul, would significantly extend its reach across the Greater Seoul area. There is a catch, however: mergers between savings banks in the metropolitan area are permitted only when at least one party has an asset quality rating of Grade 4 or below, or a BIS capital adequacy ratio of 12 percent or lower. Because Acuon Savings Bank is a sound institution that does not meet those conditions, the two savings banks will have to continue operating as separate legal entities for now.


psj@heraldcorp.com