KB Financial Group has won a bid to buy a controlling stake in Hyundai Securities, offering more than 1 trillion won, or three times its market value, Hyundai Group and the lead manager of the sale said on March 31.
Hyundai Group and EY Hanyoung said they picked KB as the preferred bidder for the group's brokerage affiliate because the financial group offered the highest price for the 22.56 percent stake in the firm owned by Hyundai Merchant Marine (HMM), a shipping affiliate of the group, and other minor shareholders. The shipping company is selling the stake to pay part off its 4.3 trillion won debt.
With the decision, KB beat its two rivals, Korea Investment Holdings and Hong Kong-based private equity firm Actis, which were also known to have offered close to 1 trillion won.
"We concluded that KB was the most preferred bidder after evaluating a wide range of criteria, including the deal price and ability to pay, among others," said a spokesman for Hyundai Group. "With the deal, we expect to accelerate our efforts to normalize the group."
A market watcher said that KB has paved the way in diversifying its revenue sources from non-banking affiliates, strengthening its weak brokerage house. KB failed to purchase KDB Daewoo Securities in December, losing to Mirae Asset Financial Group. In 2013, KB lost its bid to acquire Woori Investment & Securities to NH Financial Group.
"With Hyundai Securities under our wing, we will be able to strengthen our non-banking businesses, such as corporate investment banking and wealth management services. A balanced portfolio will help us improve our bottom line and compete with global rivals in the long term," KB said in a statement.
KB offered the highest price — more than 1 trillion won ($877 million) — for the majority stake, accounting firm EY Hanyoung, which advised on the deal, said without elaborating. The majority stake was valued at 367 billion won based on Thursday's closing price of 6,870 won.
HMM said the deal will be completed in the second half of the year and the proceeds from the deal will be spent as operating capital. The shipping company has placed non-core assets and properties on the market as part of restructuring efforts after it was hit hard by the 2008 financial crisis. Oversupply and lower freight charges have squeezed its profits in recent years.
KB Financial Group Inc. will strengthen non-banking sector and online services to keep abreast of the financial trend that veers more away from the traditional brick-and-mortar business. The financial group will also accelerate inroads into overseas markets.
Chairman and Chief Executive Officer Yoon Jong-kyoo, who enters his second year in office next year, is said to be targeting to raise the non-banking revenue ratio from to 40 percent in the longer run from the current 31 percent to 32 percent.
The group received a setback in its attempt to acquire Daewoo Securities, but will instead focus on reinforcing KB Investment & Securities while eying other brokerages and insurers for acquisition opportunities.
In the meantime, the group will bolster financial technology as a part of its plan to launch Internet-only service next year, so that its customers will receive the same services they get by visiting its banks on online and mobile platforms. It has joined up with a fintech company to develop biometric authentication programs. It also will expand its incubation program for fintech firms dubbed as the Starters Valley.
“Going mobile will be our key strategy,” Yoon said. The bank has joined a consortium led by Kakao Bank that won a license to start the country’s first web-based banking service.
The bank’s global agenda will also pick up next year. Following its acquisition of Bank Center Credit in Kazakhstan, the bank plans to open new outlets in Gurgaon in India and Hanoi in Vietnam and strengthen investment banking business at its Hong Kong operation to bolster its presence in Asia.
“In appreciation of your continued interest and trust, all members of KB Financial Group will strive in unison to fulfill long-held expectations in earnest,” the bank said. “With rigorous internal controls and ethical business management well in place, we aspire to be a clean financial institution. We will also be at the forefront of promoting ‘Creative Finance’ and financial support to SMEs and low-income customers, thereby staying committed to our wider role in the development of Korean economy,” Chairman Yoon pledged.
_윤종규.jpg)
