[비즈한국] Taekwang Group has participated in the preliminary bid for the acquisition of KDB Life Insurance. Taekwang Group has shown a significant presence in the mergers and acquisitions (M&A) market recently by acquiring multiple companies. Some analysts suggest this is a reorganization of the business portfolio in anticipation of the return of former Taekwang Group Chairman Lee Ho-jin. However, as many major corporations have joined the preliminary bid for KDB Life, it is too early to guarantee a successful acquisition for Taekwang Group.
Aggressive M&A after announcing '10 Trillion Won Investment over 10 Years' in 2022
According to the financial sector, five entities have participated in the KDB Life preliminary bid: Taekwang Group, Korea Investment Holdings, Samsung Life Insurance032830, Hanwha Life Insurance088350, and Kyobo Life Insurance. The business world is paying close attention to Taekwang Group. Since last year, Taekwang Group has been actively making its presence felt in the M&A market by successively acquiring Aekyung Industrial018250, Dongsung Pharmaceutical002210, Smart Today, and Courtyard Marriott Namdaemun (currently Courtyard Marriott Seoul Myeongdong). Taekwang Group also attempted to acquire IGIS Asset Management, but the deal fell through due to a mismatch in terms.
Such bold moves by Taekwang Group were somewhat expected. In December 2022, Taekwang Industrial announced plans to invest 10 trillion won over the next 10 years. Specifically, it explained that it would invest 6 trillion won in the petrochemical sector and 4 trillion won in the textile sector. While it is difficult to see a direct link between Taekwang Group's recent M&As and its petrochemical and textile businesses, it is clear that it is engaged in large-scale investments.
What stands out is that Taekwang Industrial's financial health remains very solid despite its aggressive M&A spree. According to its quarterly report, Taekwang Industrial's debt-to-equity ratio was only 13.52% as of the end of March this year. While its total equity exceeds 4 trillion won, its total liabilities are around 500 billion won. This is interpreted as a result of the debt-free management policy that has been handed down in Taekwang Group since the past. Another key affiliate, Daehan Synthetic Fiber, also maintains a very healthy debt-to-equity ratio of 17.85%.
Taekwang Group's governance structure flows from 'Former Chairman Lee Ho-jin and his family → TRN → Taekwang Industrial & Daehan Synthetic Fiber.' TRN is the largest shareholder of Daehan Synthetic Fiber and the second-largest shareholder of Taekwang Industrial. The largest shareholder of Taekwang Industrial is former Chairman Lee Ho-jin. Furthermore, Taekwang Industrial and Daehan Synthetic Fiber control the group's major affiliates. Therefore, the healthy financial structure of these two companies can be interpreted as evidence of the overall financial stability of Taekwang Group.
In fact, Taekwang Group was passive in M&As and investments throughout the 2010s. The relatively low capital expenditure is considered one of the reasons for its healthy financial structure. However, this passivity limited its growth. In the early 2010s, Taekwang Group ranked within the top 30 conglomerates in Korea, but it currently remains at 48th place. Even this ranking is an improvement from its 59th position last year, thanks to its recent active investments.
Sluggish performance is also believed to have influenced its investment stance. With Taekwang Industrial's earnings declining over the past few years, there is a need for new businesses to serve as cash cows. According to business reports, Taekwang Industrial's revenue has decreased as follows: 2.7038 trillion won in 2022, 2.1263 trillion won in 2023, 2.0275 trillion won in 2024, and 1.8274 trillion won in 2025. It also recorded losses for four consecutive years from 2022 to 2025.
Taekwang Industrial specializes in petrochemicals and textiles. The ongoing downturn in the petrochemical industry, intensified competition in the textile sector, and the legacy of its passive investment stance since the 2010s are cited as reasons for the continued decline in revenue. Although Taekwang Industrial showed improvement in the first quarter of this year with 533.3 billion won in revenue compared to the same period last year, it still failed to escape a deficit, recording an operating loss of 11.4 billion won.
Business observers speculate that Taekwang Group's aggressive M&A strategy may be linked to the potential return of former Chairman Lee Ho-jin to management. Former Chairman Lee was sentenced to three years in prison for tax evasion and other charges and was released upon the completion of his sentence in October 2021. Following a special pardon in 2023, there are no legal restrictions on his return to management. Taekwang Group began its active M&A drive after this pardon. This is why analysts suggest that the group is realigning its business portfolio in preparation for his return. The fact that the prosecution recently indicted the former chairman on charges of creating a slush fund remains a variable. However, a Taekwang Group official stated regarding the former chairman's return, "Nothing has been decided."
What is the likelihood of a successful acquisition of KDB Life?
Taekwang Group has initiated the acquisition of KDB Life through its affiliate, Heungkuk Life Insurance. The sale price for KDB Life, as discussed in the financial sector, is around 1 trillion won. According to its quarterly report, Heungkuk Life Insurance had total assets of 23.8161 trillion won as of the end of March this year, but its cash and cash equivalents were around 217.4 billion won. However, it is expected that securing 1 trillion won would not be difficult if it receives support from other affiliates like Taekwang Industrial.
Although interest in KDB Life is high, it is unlikely that the sale price will increase significantly from this point. This is because there are multiple other insurance companies available for M&A, such as ABL Life Insurance and BNP Paribas Cardif Life Insurance. The Korea Development Bank (KDB) has attempted to sell KDB Life six times since 2014, but failed every time. If the sale does not go through this time either, it could face criticism for failing to recover public funds. Thus, selling KDB Life is a desperate situation for KDB as well.
Competitors in the bidding process, such as Korea Investment Holdings, Samsung Life Insurance, and Hanwha Life Insurance, possess capital strength that is not inferior to Taekwang Group and hold significant influence in the financial sector. Currently, the atmosphere in the financial sector suggests that either Korea Investment Holdings or Taekwang Group is the likely acquirer of KDB Life.
As of the end of March this year, Samsung Life Insurance's total assets reached 371 trillion won. The total assets of Hanwha Life and Kyobo Life amount to 178 trillion won and 149 trillion won, respectively. KDB Life's total assets are around 16 trillion won. If Samsung Life, Hanwha Life, or Kyobo Life acquire KDB Life, their asset growth rate would be only 4–11%. However, if Heungkuk Life acquires KDB Life, its assets would increase by more than 60%. For Korea Investment Holdings, which currently lacks insurance-related affiliates, acquiring KDB Life would add a new vertical to its business portfolio.
The Korea Development Bank plans to select a shortlist of qualified candidates soon and begin due diligence on KDB Life. The final bid for KDB Life is expected to take place as early as August.
Heungkuk Life has not released any specific statement regarding the acquisition of KDB Life.