South Korea's fifth largest conglomerate Lotte Group is seeking buyers for three financial units, including Lotte Non-Life Insurance, so as to comply with rules regarding holding companies.
The group hopes to receive letters of intent for all three by the end of this month, reported Pulse News. The formal auction will take place in March, sources said. The other two financial units are Lotte Card and Lotte Capital.
Korean law bars a non-financial holding parent from owning interests in financial entities. Lotte set up its holding company in 2017. Newly established holding companies must unload any such banned stakes within two years. Thus, Lotte Group must dispose of the financial units by next October.
Market analysts say the most likely candidates to acquire the companies are financial groups. Non-financial companies are likely to have difficulties in operating the units as the business conditions surrounding the credit card and insurance industries are not favourable.
Another unfavourable factor pushing the sale of Lotte Insurance is the implementation of IFRS17, a new set of strengthened international reporting standards that will go into effect in January 2022.