Korea Deposit Insurance Corporation (KDIC) is poised to start a process to sell its remaining 15.25 percent stake in Hanwha Life Insurance Co. hopefully in a block deal by selecting one domestic and foreign deal advisor this month.

In a request for proposal the authority issued recently, candidate advisors were asked to review all possible deals such as private block sale and open auction, according to financial industry sources on Tuesday.

The government incrementally disposed of its interest in the insurer and prefers to sell the remaining 15 percent in a block deal, said an unnamed government official. A block deal occurs off the market between a seller and a buyer on a pre-determined price and amount in a single transaction. A KDIC official said KDIC and the insurer could go on a global roadshow to attract investors and discuss an option to sell the government stake together with some interest owned by Hanwha Corporation.

Poor performance of the insurer could likely dampen the sale appeal. Hanwha Life’s net profit for the first three quarters of last year plunged 20.7 percent on-year to 412.8 billion won ($360.1 million) due to a negative margin caused by low interest rates mainly in its insurance plans sold with high fixed-interest rates. The insurer’s stock price has dipped to 6,500 won from 7,220 won early this year. KDIC bought Hanwha Life shares for 10,645 won apiece.

Public offering pipeline also bodes badly for the deal. ING Life is planning an IPO and Kyobo Life is testing the waters to go public. This burden may be further complicated when Hanwha Group tries to sell its stakes in Hanwha Life to secure necessary liquidity. The group’s ownership in the insurance arm totals 61.79 percent.

By Park Joon-hyung and Chung Seok-woo

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