The sale process for Lotte Insurance is facing another delay. Although it was initially expected that public bidding would begin at the end of last month, the schedule appears to be pushed back as securing a buyer has not met expectations. Industry analysts note that finding a buyer to replace Shinhan Financial Group is proving difficult.
According to insurance industry sources on the 3rd, Lotte Insurance has yet to finalize the schedule for public bidding. While it was anticipated that the bidding process would commence by the end of last month at the latest, no specific timeline has been announced. This is interpreted as a decision to proceed with bidding only after securing a sufficient pool of candidates. With a limited number of potential buyers, rushing the process would make it difficult to expect price enhancement through competition.
The sale of Lotte Insurance initially placed more emphasis on individual negotiations rather than open competition. Shinhan Financial Group attempted to pursue the acquisition independently, but negotiations stalled due to an inability to bridge differences over the purchase price. Consequently, Lotte Insurance has shifted its strategy toward public bidding, aiming to secure multiple buyers and have its valuation reassessed by the market.
However, analysis suggests that the delay in the sale is driven not only by pricing issues but also by the interests of the major shareholder. JKL Partners, the largest shareholder of Lotte Insurance, and co-investor IMM Investment are reportedly taking different stances on conditions for recovering their investment. While JKL prioritizes recovering its investment through a sale, IMM is understood to insist on securing a recovery amount above a certain threshold. The two asset management firms jointly established a special purpose vehicle (SPV), Bigtura, which holds 77.04% of Lotte Insurance shares.
Notably, in October 2024, when extending the maturity of its existing acquisition financing, Bigtura provided all 239,082,287 shares of Lotte Insurance as collateral and raised a total of 465 billion won. This included a senior loan of 375 billion won and a mezzanine loan of 90 billion won. Shinhan Financial Group affiliates, including Shinhan Bank and Shinhan Investment Corp, participated in Bigtura’s acquisition financing at the time, with their debt exposure reported to be approximately 125 billion won, the largest among the lending syndicate. The insurance industry believes that Shinhan Financial Group holds priority rights in the sale of Lotte Insurance due to this transaction relationship.
Of course, if a new buyer emerges and offers a higher price than Shinhan Financial Group, a competitive bidding structure could be formed. However, if an alternative buyer cannot be secured, there is a possibility that negotiations with Shinhan Financial Group will resume after the public sale process. Industry observers note that it is unlikely for a new candidate to appear in the short term, considering Lotte Insurance’s valuation of approximately 900 billion won and the burden of capital expansion required post-acquisition.
A financial industry official stated, “Lotte Insurance’s valuation is significant, making it difficult for new candidates to emerge,” adding, “After confirming market pricing through a public sale, JKL and Shinhan Financial Group may ultimately return to the negotiating table to discuss price.”
in FINANCE
