Pursuing Acquisition of 29.6% Stake for 244.8 Billion KRW
Private equity firm KCGI has been selected as the preferred bidder to acquire shares of Hanyang Securities, owned by the school foundation Hanyang Hakwon.
On the 2nd, Hanyang Securities announced in a public disclosure that it had reached a tentative agreement with KCGI to transfer 3,766,973 common shares (29.6% stake) owned by Hanyang Hakwon and its affiliated companies Baeknam Tourism and HBDC. The sale price was set at 244.853245 billion KRW, applying a price of 65,000 KRW per share. This per-share price is approximately 4.2 times the closing price of Hanyang Securities on the 2nd, which was 15,580 KRW.
It is reported that five parties participated in this sale bidding, including KCGI, fashion company LF, and another private equity consortium. LF was selected as the secondary negotiation candidate. LF is already engaged in real estate finance through its subsidiary Koramco Asset Trust and has been pursuing the acquisition of a securities firm to diversify its financial business sectors.
With this, KCGI can begin the acquisition process of Hanyang Securities from a favorable position about 1 year and 7 months after officially acquiring Meritz Asset Management (now KCGI Asset Management) in January last year. On the day, KCGI stated, "We highly evaluate the stability and growth potential of Hanyang Securities and expect synergy effects with KCGI, KCGI Asset Management, and KCGI Alternative Investment Management based on this." They added, "Going forward, we aim to develop the capabilities of the private equity fund (PEF) by encompassing these assets and to emerge as a leading global financial company." Furthermore, they said, "Based on the case where no forced restructuring occurred among Meritz Asset Management employees over the past year since acquisition, we plan to maintain employment for existing Hanyang Securities staff."
Although the acquisition of Hanyang Securities requires passing the financial authorities' suitability review for major shareholders, KCGI is expected to face little difficulty since it already received approval from the authorities during the Meritz Asset Management acquisition. However, the unusually rapid sale bidding by Hanyang Hakwon and suspicions within the industry that KCGI might have engaged in a 'parking transaction' by reselling Hanyang Securities later could pose challenges to the acquisition.
KCGI is a private equity firm founded in 2018 by well-known analyst Kang Sung-bu, who serves as CEO. It is recognized for aggressive investments under the banner of improving corporate governance and prioritizing shareholder rights.
Hanyang Hakwon held a board meeting on the 9th of last month and decided to sell Hanyang Securities to resolve financial difficulties faced by Hanyang University and Hanyang University Hospital. Hanyang Securities was established in 1956 by Hanyang University to diversify its revenue and has maintained a unique identity as a securities firm under a university for over 60 years. It is a small- to medium-sized securities firm ranked 28th domestically by equity capital, mainly handling corporate services such as bond issuance and real estate finance.
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