ING's long awaited sale of Asian life insurance and the asset management units will help the Dutch bancassurer to partly repay the 3 billion euros ($3.81 billion) of state aid plus the 50 percent premium it still owes the Dutch government.

The bids were submitted late on Friday and the indicative offers ranged between 6-7 billion euros ($7.6-$8.9 billion), according to one source with knowledge of the matter. Of the eight to 10 companies that sent offers, a shortlist will emerge by the end of May, the source said, adding that five bidders expressed interest for the whole Asia division while the rest sought parts of the business.

Still, some suitors have developed cold feet, as demonstrated by Samsung Life Insurance's (032830.KS) decision on Thursday to pull out of the race at the last minute. South Korea's Kyobo Life has also dropped out, and it was also unclear whether Prudential Financial Corp (PRU.N) took part in the first round.

Prudential Financial was seen as one of the strongest contenders to buy the whole Asian unit, and its absence from the process could be a setback to competitive dynamics of the auction, sources said.

A sale topping $7 billion would rank as Asia's top insurance M&A deal and add to a flurry of financial institutions deals being launched in Asia this year.

After receiving a government bailout in 2008, ING has sold 15.2 billion euros worth of assets across the world. The Asian sales would figure among the top two deals from ING's stable.

Asian insurer AIA Group Ltd (1299.HK) and Korea's KB Financial Group (105560.KS) also submitted first round bids, sources said. Korea Life Insurance Co (088350.KS), Canada's Sun Life Financial Inc (SLF.TO), and Switzerland's Zurich Insurance Group (ZURN.VX), were also expected to submit offers.

U.S. private equity fund J.C. Flowers & Co, TPG TPG.UL and Carlyle Group are among the buyout shops that have expressed interest, though they are expected to team up with a bidder to buy the Japanese business rather than bid on their own, sources said.

The sources declined to be identified because details of the auction process remain confidential. ING declined to comment.

Companies mentioned in this report either could not be reached for comment, or declined to comment.

As part of the Asian divestment, ING received about 10 initial bids for its Asian asset management business this week. The asset management business, expected to fetch between $500 million and $600 million, is being sold separately.

ING had sent out more than a dozen information memorandums for its insurance business, which spans southeast Asia and includes operations in Japan and South Korea. A winning bid by a larger insurer could introduce more competition into Asia's rapidly growing life insurance market, currently dominated by AIA Group Ltd (1299.HK) and British insurer Prudential plc (PRU.L).

RARE ASSET

ING's Asian operations offer a platform for insurers keen to expand their Asian footprint and tap into the region's rapid premium growth. Life insurance premiums in emerging Asia are forecast to grow at 9.5 percent this year and 8.7 percent next year, nearly three times the world average, according to Swiss Re estimates.

"This is a once-in-a-lifetime opportunity which many CEOs will find hard to let go," said one banker who is advising a potential buyer.

ING CEO Jan Hommen said last week that the Asian divestments would probably fetch less than 8 billion euros ($10.2 billion).

A deal would need to surpass $7.06 billion to become Asia's biggest insurance deal and overtake Australian fund manager AMP's (AMP.AX) 2011 purchase of AXA's Australian unit, Thomson Reuters data shows.

Most buyers are likely to place aggressive bids in the first round in order to advance to the second round. But the deal has its own challenges and not all bidders are keen to lay their hands on the entire Asian pie.

Potential buyers are most wary of ING's Japan insurance business due to uncertainty over liabilities arising from variable annuity products on its books there.

ING's Southeast Asian operations are the most sought after, sources said. ING has indicated that it prefers bids for the whole Asian business, though it is allowing offers for three geographic regions: Southeast Asia, South Korea and Japan.

ING has prohibited bidders from forming consortiums in the first round though those who move into the second round could join hands and break up the asset.

ING's decision to invite bids for geographic portions as well as its entire Asia operations is designed to enhance bid competition and maximise sale value, sources said.

ING plans to hold management presentations for the shortlisted bidder by mid-June sources added.

The sources were not authorized to speak to the media.

All companies mentioned in this report either declined to comment or could not be reached for comment.

BANKERS' PAY DAY

ING operates across seven Asian centres. Profits from its Asia-Pacific insurance operations rose 39 percent in the first quarter of 2012 from a year ago to 218 million euros ($282.2 million), according to the latest company filings.

South Korea and Japan accounted for 77 percent of the profits while Malaysia accounted for 10 percent. Japan accounted for about 45 percent of Asia-Pacific's underlying profit before tax, followed by South Korea and Malaysia.

For investment banks starved of IPOs and M&A deals, ING's Asian divestment could provide a much needed boost. Bankers and lawyers stand to earn about $100 million in fees if the deal is completed, some sources said.

By winning the sell-side mandate, Goldman Sachs (GS.N) and J.P. Morgan (JPM.N) are best-placed to earn a slice of the fee pool. Their final payout will hinge on the structure of the deal and the final price among other factors.

Freeman & Co estimates banks could make $60 million to $70 million in advisory fees, excluding financing, hedging and other revenue streams. The calculation does not include lawyers' fees.

The M&A advisory fees will be the most significant but there could be additional money made on forex and interest hedging given the cross-border nature of the transaction.

($1 = 0.7869 euros)

(Additional reporting by Clare Baldwin and Miyoung Kim; Editing by Mark Bendeich, Michael Flaherty and Daniel Magnowski)

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