Will Hillhouse's W1tr Igis takeover bet win over Korean rivals?

Hillhouse, one of Asia’s most influential investment firms, has emerged as a surprise frontrunner in the race to acquire Igis Asset Management, intensifying a contest that had been expected to remain local and driving up the valuation in a late-stage turn.

Industry reports Friday said Singapore-based Hillhouse Investment Management raised its offer for Igis to about 1.1 trillion won ($760 million), up from the roughly 900 billion won initially submitted, and the highest bid so far. Rival bidders Heungkuk Life and Hanwha Life have reportedly offered about 1.05 trillion won and 900 billion won, respectively.

Competition has sharpened as more shareholders join the sale process. The deal originally involved nearly 70 percent of Igis, held by major shareholder Son Hwa-ja — the wife of the late founder Kim Dae-young — and several strategic investors. After the main bidding began, minority shareholders opted in as well, boosting the stake on offer to almost 98 percent.

With the transaction structured as a progressive deal that continually favors the top bidder, Hillhouse now moves ahead of Heungkuk and Hanwha, previously seen as the leading domestic contenders.

Yet some market officials say Hillhouse’s sudden price jump may be a tactical play to force up the valuation. Progressive deals often spiral into bruising, drawn-out contests as bidders repeatedly lift offers to hold the lead.

Such concerns aren’t new. Goldman Sachs, the lead adviser on the Igis sale along with Morgan Stanley, has previously faced criticism for fueling aggressive price escalation in Korean M&A processes, including the sales of ING Life, Tongyang Magic and LIG Insurance.

The possibility that the nation’s largest real estate fund manager could be sold to a foreign owner is also stirring unease. Since its founding in 2010, Igis has grown rapidly by managing mandates for major public pension institutions.

A meaningful share of its more than 60 trillion won in assets under management still comes from entities such as the National Pension Service, the sole manager of retirement assets for Koreans. As a result, there are concerns over whether a foreign owner could shift investment or risk-management priorities, according to industry sources.

Reports also indicate Igis’s current owners prefer a domestic buyer, citing alignment with local investment practices and stability in overseeing pension-linked assets.

Hillhouse, though headquartered in Singapore, is fundamentally backed by Chinese money. Founder and CEO Lei Zhang, a Chinese investor, established the firm in 2005 and grew it into an asset manager overseeing roughly $70 billion. The firm invests globally with a focus on Asia and is known for early bets on regional tech names including China's Tencent and Korea's Woowa Brothers, Kurly and Krafton.

Even if Hillhouse becomes the preferred bidder, the regulatory hurdles remain steep. Any change in the largest shareholder of a local financial institution requires approval from the Financial Services Commission, which examines the buyer’s eligibility as a controlling shareholder. The review covers not only financial strength and any history of legal violations but also broader considerations such as governance transparency and social reputation.