[Exclusive] Woori Financial Group Restructures After Acquiring Daol Investment

Stock Trading Contract Expected Within This Month
Personnel Restructuring Planned for Management Headquarters with Many High-Salary Employees
Possibility of Personnel from Woori Financial Joining Increases

[Asia Economy Reporter Kwangho Lee] Woori Financial Group is finalizing the acquisition of venture capital (VC) firm Daol Investment (formerly KTB Network) and plans to proceed with restructuring. According to the investment banking (IB) industry on the 23rd, Woori Financial Group plans to implement restructuring immediately after acquiring Daol Investment. The specific transaction terms are currently being negotiated, and a stock purchase agreement (SPA) between the two companies is expected to be signed within this month. The restructuring is likely to take place as early as the first half of the year.

This restructuring is expected to focus on the management division. Currently, Daol Investment's workforce consists of 39 employees in total, with 21 in the investment division and 18 in the management division. The size of the two divisions is similar, but Woori Financial Group considers the management division's workforce to be somewhat large.

They are also paying attention to the fact that, compared to similarly sized venture capital firms, there are several employees receiving multi-million won high salaries. In particular, performance bonuses have come under scrutiny. The performance bonus system in domestic venture capital firms generally allocates about 20% of profits exceeding an internal rate of return (IRR) of 0-8%.

The management company reserves a portion with its capital, and the remaining performance bonuses are distributed to key personnel. Some firms distribute bonuses at a fixed ratio according to internal regulations, while others provide incentives differently based on performance or personnel evaluations. Although there are differences in degree, most focus on investment screening officers.

In the case of Daol Investment, it is reported that the management division receives a significant portion of the performance bonuses. From Woori Financial Group's perspective, the management division being heavy is uncomfortable, and the concentration of bonuses there is also a concern. Therefore, a considerable number of management division personnel are expected to leave the company.

An IB industry official said, "Woori Financial Group has recently completed internal coordination regarding the acquisition price of Daol Investment and has reached the stage of discussing restructuring," adding, "They are particularly dissatisfied with the management division." He continued, "There is a high possibility that personnel from Woori Financial Group will join along with the restructuring."

In response, a Woori Financial Group official denied, saying, "We are not considering any personnel reorganization or restructuring after acquiring Daol Investment," and added, "We plan to respect autonomous management as much as possible."

Meanwhile, if Woori Financial Group acquires Daol Investment, all four major domestic financial holding companies will own venture capital firms. Shinhan Financial Group (Shinhan Venture Investment), KB Financial Group (KB Investment), and Hana Financial Group (Hana Ventures) all have VCs.