SEOUL, Jan. 14 (Xinhua) -- South Korea's largest institutional investor, National Pension Service (NPS), has settled a deal with state-run Korea Development Bank (KDB) to invest up to 265 billion won (236.2 million U.S. dollars) to purchase the life insurance unit of financially troubled Kumho Asiana Group, the pension fund said Thursday.

    According to the NPS, it will take part in making investment in a private equity fund (PEF) to be jointly established by the KDB and local M&A fund Consus Asset Management Co. which aims at taking over Kumho Life Insurance Co.

    "We have decided to take part in the PEF as we expect synergy effects with Kumho Life Insurance with the KDB taking the leading role," the NPA was quoted as saying by local media.

    The two financial institutions launched the PEF late last month under the condition that Consus pours around 20 billion won (17.8 million U.S. dollars) and KDB injects up to 265 billion won (236.2million U.S. dollars) and draws the rest of investors.

    The deal came as Consus Asset management, which originally went on a deal to take over a 52 percent stake in Kumho's life insurance unit, fell short of the financing term and, accordingly, KDB decided to join the move.

    However, detailed plans, including other participants in the PEF, as well as its size and organization, are yet to be disclosed, according to media reports.

    Late 2009, Kumho Asiana decided to put two of its units, Kumho Tire Co. and Kumho Industrial Co., under a debt rescheduling program as part of their efforts to pull the group out of cash squeeze.

Special Report:  Global Financial Crisis