Hanwha hires JPMorgan to sell Korea Life stake

HONG KONG (Reuters) - Hanwha Group has hired investment bank JPMorgan (JPM.N) to sell a 9.9 percent stake in its Korea Life insurance unit, sources said on Wednesday, in a deal that could value the unit at more than $7.5 billion.

Affinity Equity, Carlyle Group and MBK Partners are among several private equity firms interested in the stake, which is targeting $500 million to $750 million from foreign investors, sources with direct knowledge of the deal told Reuters.

Hanwha has previously laid out plans to publicly list the life insurance company. A minority stake from a foreign investor would not only help give Korea Life a pre-IPO valuation, but would raise cash for Hanwha's bid for a stake in Daewoo Shipbuilding & Marine Engineering (042660.KS).

The Daewoo Shipbuilding deal is expected to fetch up to $8 billion. Hanwha's ability to finance a bid is seen as relatively weak compared to its rivals.

"We don't have a firm plan for such a deal yet," Ju Cheol-beom, a Hanwha Group spokesman, said, referring to the Korea Life stake sale.

But sources involved in the process said that private equity firms are already poring over bid-related documents in an auction that will likely kick off in the next couple of weeks.

So far, the process has focused on foreign private equity firms because the size of the stake on offer. A more than $500 million equity check would fit well with the kind of cash big buyout firms are willing to pay in Asia.

With financing markets hit by the deepening global credit crunch, a private equity firm would probably have to pay all cash for a Korea Life stake.

That is something private equity firms are typically loathe to do, but finding big-ticket deals in Asia with strong growth prospects is something major private equity players are struggling with.

Affinity, an Asia focused private equity firm, has a successful track record in South Korea. It was among the investors that bought South Korean electronics chain Hi-Mart in 2005 for $833 million, which later sold for more than $2 billion.

Carlyle Group has a long standing presence in Asia, and has invested in the insurance sector in the region before.

MBK Partners, founded by a former Carlyle member, is a South Korea-based private equity firm, with investments in three domestic companies according to its website.

The three are among the firms interested in the Korea Life stake, sources said.

Carlyle and JPMorgan declined to comment. Affinity and MBK did not return calls seeking comment.

Conglomerate Hanwha Group said last month it had cleared all hurdles to the Korea Life IPO after the insurance company cleaned up accumulated losses as the end of April, adding that it would kick off the offering process as soon as possible.

Hanwha Group, led by chemical and trading company Hanwha Corp (000880.KS), runs businesses ranging from construction to petrochemical production (009830.KS) and stockbroking

(003530.KS).

(Additional reporting by Rhee So-eui in Seoul, Editing by Jonathan Hopfner)