Korea Development Bank (KDB) has called off the plans to sell its life insurance subsidiary to private equity firm JC Partners, The Korea Times reported.

KDB and JC partners had agreed on the sale of KDB Life in late 2020 in a deal valued at around $160m (KRW200bn).

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The bank, through its private equity joint venture with Consus Asset Management, KDB Consus Value (KCV) PEF, holds over 90% stake in the life insurer.

KCV PEF has informed JC Partners that it would scrap the stock purchase agreement (SPA), the report said. 

The deal was called off because the state-owned KDB feels that the private equity firm will not be able to qualify the assessment process by the Financial Services Commission (FSC).

In June 2021, JC Partners had reached out to FSC for the assessment but did not receive clearance because it had failed to secure the necessary capital for the insurance firm’s takeover. 

Furthermore, earlier this month, JC Partners-backed MG Non-life Insurance was designated insolvent by FSC. 

Now the chances for JC Partners passing the regulatory test are even slimmer, as being the major shareholder of an insolvent firm is one of the key factors for disqualifying a firm for takeover.

With JC Partners out of the deal, KDB will have to find a new buyer for the life insurance arm, which it had acquired in 2009 as part of Kumho Group’s restructuring process.

“KCV PEF will strive to raise the corporate value of KDB Life, and will look into the option of selling the company, considering market conditions,” the government backed-bank was quoted by the publication as saying.