[Asia Economy Reporter Kwon Jae-hee] Woori Financial Group, which is pursuing the expansion of its non-bank business portfolio, is moving forward with the acquisition of Daol Investment, the venture capital (VC) arm of Daol Financial Group.
According to the financial industry on the 7th, Woori Financial submitted a letter of intent to acquire Daol Investment to Daol Investment & Securities at the end of last year.
Among several parties, including Woori Financial, that submitted letters of intent, Woori Financial is reported to have offered the most favorable terms.
In this regard, Woori Financial and Daol Investment & Securities stated that they are conducting "positive discussions."
However, it has been confirmed that they have not yet signed a legally binding letter of intent (LOI) or been selected as the preferred negotiation partner for acquisition.
Accordingly, negotiations between the two parties are expected to continue regarding various conditions, including the acquisition price.
This acquisition effort appears to be a result of aligned interests between Woori Financial, which wants to expand its non-bank business portfolio, and Daol Investment & Securities, which needs capital injection.
Daol Investment & Securities is currently selling affiliates to raise funds following a liquidity crisis triggered by real estate project financing (PF). According to Korea Ratings, as of the third quarter of last year, Daol Investment & Securities’ contingent liabilities amounted to 646 billion KRW, which is 93% of its equity capital.
Daol Investment & Securities is reportedly seeking a sale price of over 200 billion KRW on the condition of selling all its shares (52%) in Daol Investment.
Daol Investment, established in 1981, is a first-generation domestic VC that has invested in startups such as Viva Republica (Toss) and Woowa Brothers (Baedal Minjok).
In addition to Daol Investment, Daol Investment & Securities sold Daol Credit Information this month for 13 billion KRW to Mason Capital and Lead Capital Management. It is also in the process of selling its Thailand subsidiary.
Earlier, at the end of last year, it conducted voluntary retirement for regular employees.
During the privatization process, Woori Financial is evaluated to have a relatively weak non-bank sector among the so-called five major financial holding companies, as it separated and sold off the former Woori Investment & Securities (now NH Investment & Securities) and Woori Aviva Life Insurance (now DGB Life Insurance).
Therefore, it has prioritized acquiring securities firms that can generate the greatest group synergy and has also shown interest in venture capital (VC).
Son Tae-seung, chairman of Woori Financial Group, stated in his New Year's address this year, "The more difficult the market environment, the more we must enhance the market position of our subsidiaries' core businesses to strengthen the profit base," adding, "This year, we will accelerate the expansion of the non-bank business portfolio, including securities, insurance, and venture capital (VC), which was postponed last year due to market instability."
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