The new owner of Korea’s largest real estate asset management company, IGIS Asset Management, is likely to be Chinese private equity fund (PEF) Hillhouse Investment. According to investment banking industry sources on the 9th, Morgan Stanley and Goldman Sachs, the main agents for the sale, have named Hillhouse as the preferred bidder for IGIS Asset Management. The takeover battle was initially expected to be a two-way contest between domestic insurance companies Heungkuk Life and Hanwha Life, but it is reported that Hillhouse overturned the situation by raising its bid to 1.1 trillion won after the main bidding. Although Heungkuk Life offered the highest bid of 1.05 trillion won, it was pushed back in favor.
The biggest variable in this deal is the qualification review of the major shareholders by financial authorities. This process verifies whether an entity is qualified to become the major shareholder of a financial company based on criteria such as the source of funds, financial soundness, and transparency of governance. Given that IGIS Asset Management manages public funds, including the National Pension Service, it is expected that this review will be particularly stringent. While Chinese capital itself has not been grounds for disqualification, as seen in the 2015 acquisition of Dongyang Life and ABL Life by Anbang Insurance, concerns surround Zhang Lei, the founder of Hillhouse.
Zhang, originally from Henan Province in China, studied international finance at Renmin University and completed an MBA at Yale University, growing his portfolio through investments in Chinese tech giants like Tencent and JD.com. Although he holds Singaporean citizenship, there are views that “he is not free from the influence of Chinese capital.” In fact, the Wall Street Journal reported last year that Hillhouse significantly reduced mentions of China on its website and decreased its number of Chinese employees.
Hillhouse has also been involved in controversy after receiving dividends of 69.9 billion won from SK Eco Prime, which they acquired in 2023, surpassing the company’s annual net profit (16 billion won). While some criticized this as excessive dividends by a foreign PEF, the industry argued it was more about internal financial restructuring involving replacing high-interest debt of the holding company with new loans under the operating company’s name.
Meanwhile, Heungkuk Life, which did not make it as the preferred bidder, expressed strong opposition, stating the process was “neither fair nor transparent.” In an official statement, Heungkuk Life indicated potential legal action, alleging that the selling side declared before the main bidding that they would not engage in a “progressive deal,” but later delayed the announcement of the preferred bidder and offered additional price competition only to Hillhouse, asking for a bid surpassing the highest bid from the main bidding. A progressive deal involves pitting multiple shortlisted candidates against each other to raise the sale price, resembling an auction structure. Heungkuk Life also claimed there is a possibility that the sale agents leaked their bid (1.05 trillion won) to Hillhouse, criticizing the decision as collusion between foreign agents seeking huge bonuses and Chinese PEF targeting Korea’s real estate investment platform.