UPDATE 2-ING's S.Korean unit sale attracts three bids after delay
(Adds Tong Yang and MBK's bids, seller's valuation of unit, Tong Yang's ranking)
SEOUL/HONG KONG May 24 (Reuters) - Dutch bank ING has attracted two more bidders for its South Korean insurance business, said a source with direct knowledge of the matter, taking the total number to three and raising the chances of a successful deal after an earlier sale fell through.
Tong Yang Life Insurance Co Ltd and private equity firm MBK Partners made separate bids for a controlling stake in ING's South Korean insurance unit, the source said late on Friday.
They will compete with another bid made on Friday by South Korea's third-largest insurer Kyobo Life Insurance Co Ltd , and collectively breathe new life into a delayed deal previously valued at roughly $2 billion.
The deal is set to get more crowded with the country's second-largest insurer Hanwha Life Insurance Co Ltd expected to submit its own bid according to a second source with direct knowledge of the matter.
The sources declined to be identified as the bidding process was private.
The sale is set to be one of the largest M&A deals in Asia's fourth-largest economy this year, although the final value depends on the size of the stake that ING sells.
ING is only required to sell more than 50 percent in the unit by 2013 and divest the remaining interest by the end of 2016, but it wants to sell as much as possible, sources said.
The sale of a stake in its Korea insurance unit will bring ING Groep NV closer to fulfilling its agreement with European regulators to sell more than 50 percent of its Asian operations by the end of 2013.
KB Financial Group Inc had been lined up to buy the unit for roughly $2.1 billion last year, but dropped its bid in December after months of negotiations.
This time around, ING has asked bidders to attach bank letters of credit to their bids as a way to guarantee financial backing, a buy-side source and a local bank executive in charge of corporate financing previously told Reuters.
ING Life Insurance Korea Ltd is the country's fifth-largest life insurer with 22.7 trillion won ($20.11 billion) in assets as of end-2012. Although ING has valued it at between 3.2-3.6 trillion won, bidders have likely submitted a much lower price, knowing that it needs to do a deal, the first source said.
Tong Yang Life, the country's eighth-largest life insurer, is backed by Seoul-based private equity Vogo Fund, while Kyobo's investors include Ontario Teachers' Pension Plan, Singapore sovereign fund GIC and private equity firm Affinity Equity Partners.
An ING Groep spokeswoman was unavailable for comment.
Officials at Hanwha Life, Tong Yang Life and MBK Partners declined comment or could not be reached.
Goldman Sachs and JP Morgan are advising ING on the sale. ($1 = 1128.5750 Korean won) (Editing by David Chance and Sophie Walker)