Prudential Financial Inc
may sell its investment and fund management businesses in South Korea, a deal which could fetch about $850 million and could trigger a wave of consolidation in the country's brokerage and asset management sectors, where more than 100 companies compete.

Prudential, the second-largest U.S. life insurer, said on Sunday it was exploring options, including a sale, for Prudential Investments & Securities and Prudential Asset Management in South Korea, a move seen as part of an effort to shed non-core assets.

The prospective deal will bring in an estimated 700 billion won ($597 million) to 1 trillion won ($853 million), according to an earlier media report, more than double the amount the U.S. company paid to buy the businesses in 2004.

Yonhap news tipped KB Financial Group , HSBC <0005.HK>, Lotte Group and Hanwha Group as possible suitors for the Prudential units.

Earlier this year, an online news outlet reported that Prudential was in the early stages of talks with KB Financial about the sale of Prudential Investments & Securities.

A KB Financial spokesman said the company was looking at potential brokerage targets, but had not identified specific companies at this stage. The group , the parent company of Kookmin Bank, raised 1.12 trillion won in a rights offering in August to prepare for new acquisitions.

Prudential is the front runner among foreign fund houses embarking into the country's $300 billion asset management sector in the past few years, betting on growth in the pension market.

But financial industry deregulation beginning earlier this year has stoked competition with new entrants. Steady money outflows from retail stock investors have also dealt a blow to fund houses.

South Korean banks and conglomerates are keen to make forays into brokerage and asset management markets to lower their reliance on interest margins and create synergies with their retail businesses.

Hanwha Group spokesman Joo Cheol-beom said it had not made any decision on the brokerage business, while HSBC declined to comment on market rumors.

Prudential bought the two companies from the South Korean government for 355.5 billion won in 2004, making the U.S. insurer the largest foreign fund manager in the country at the time.

Prudential said it plans to hold on to its life insurance business in Korea, Prudential Life Insurance Company of Korea.

Shares of Prudential closed at $46.74 on the New York Stock Exchange on Friday.

(Reporting by Michael Erman and Kim Yeon-hee; Editing by Jan Paschal, Jonathan Hopfner and Valerie Lee)