ING Groep is closing a deal to sell its Hong Kong and Thailand insurance businesses to the son of Hong Kong tycoon Li Ka-shing, the latest divestment of the Dutch lender.

ING Groep is closing a deal to sell part of its Hong Kong and Thailand businesses to the son of Hong Kong tycoon, Li Ka-shing. 

The businesses comprise its life insurance, general insurance, pension and financial planning units in Hong Kong and Macau, and its life insurance operation in Thailand.

As part of its European bailout agreement, the Dutch group has been looking to divest these assets and is in final negotiations with Pacific Century Group, the company headed by the younger son of Li, Richard Li-Tzar-kai. 

ING will receive a total cash consideration of US$2.14 billion, said the firm, and the transaction is expected to deliver a net gain of approximately €1 billion (US$1.3 billion). The process to sell the remaining Asian insurance and investment management units is on-going.
 
"We are pleased to have found in Pacific Century Group a good home for our customers, employees and agents with the ambition to continue to expand the businesses in these countries,"  said Jan Hommen, CEO of ING Group. "This transaction underscores the steady progress we continue to make in our restructuring."
 
The agreement values ING's Hong Kong, Macau and Thai combined life insurance businesses at 24.3x estimated 2012 earnings and 1.9x estimated 2012 book value of €865 million, both on an IFRS basis.
 
ING Investment Management's funds management businesses in Hong Kong and Thailand are outside the scope of this transaction, nor will it impact ING's Asian banking activities, the firm said.

It is the latest divestment for the Dutch firm. Earlier this month ING agreed to sell its Malaysian insurance unit to Hong Kong-based AIA for US$1.7 billion. The sales come as part of its agreement with the European Union to sell its insurance and investment management businesses before the end of 2013, after receiving a €10 billion government rescue package at the peak of the financial crisis.

Since August the lender has sold its Canadian online bank for US$3.16 billion, its UK internet business and a holding in investment management joint venture, China Merchants Fund.

Richard Li, meanwhile, has been on the acquisition trail in recent years, taking advantage of the difficult market conditions for many firms. In 2010 he bought US asset manager PineBridge Investments for US$500 million from American International Group, which was AIA's parent. As chief of Pacific Century Group and chairman of PCCW, he also controls HKT Trust, HKT and Pacific Century Premium Developments.