Underwriter Goldman Sachs is scheduled to accept bids for LIG Insurance next Monday to pick the preferred bidder among six contenders, including KB Financial Group, Lotte Group and the Tong Yang Life-Vogo Fund alliance.

The other three potential bidders that have submitted preliminary proposals are MBK Partners, China-based Fosun Group and the Middle East-based Jabez Partners.

LIG Group plans to dispose of its 20 percent stake, worth 370 billion won ($350 million), in LIG Insurance to raise funds to compensate victims of the insurance unit’s earlier sale of irregular commercial paper.

After the auction of LIG Insurance kicked off in November 2013, a series of preliminary bidding processes involving Goldman Sachs’ unveiling of the six-contender shortlist have drawn wide interest as the sale target is the nation’s fourth-largest nonlife insurance firm.

Should Lotte Group take over the nonlife insurance unit of LIG Group, its financial unit Lotte Insurance could become the second-largest player in the nonlife insurance industry via consolidation.

KB Financial Group, which holds the strongest position among first-tier commercial banks, is striving to reinforce the traditionally weak nonbanking segment by acquiring insurance or stock brokerage firms.

Vogo Fund is seeking huge investment gains: the domestic private equity fund could ultimately consider selling Tong Yang Life Insurance and LIG Insurance as a package after initially acquiring LIG Insurance.

China’s Fosun Group has promised 100 percent job security of the current staff of the insurer and not to intervene in management. Jabez Partners is coordinating with the Korean Federation of Community Credit Cooperatives for the M&A competition.

Unionized workers of LIG Insurance are poised to stage a tough protest against any preferred bidder that would cut the workforce after a merger.

MBK Partners has been mentioned as the weakest contender as it has already won an earlier bidding to take over the local life insurance unit of Netherlands-based ING Group.

Some market insiders allege that LIG Group will seek to maintain its control over LIG Insurance, irrespective of the auction results.

Further, there have been allegations that the auction process might be canceled if the group raises a certain level of funds though other methods to compensate wronged investors.

While LB Investment, a friendly power of LIG Group, has expressed its intention to participate in the bidding, it is speculated that Goldman Sachs has intentionally excluded the fund from the shortlist.

By Kim Yon-se (kys@heraldcorp.com)