Hanyang Securities’ headquarters in Yeouido, Seoul
KCGI, a South Korean private equity firm, has agreed to buy a controlling stake in Hanyang Securities Co. for 220.3 billion won ($166 million), slightly lower than its original bidding price, after bringing in OK Financial Group as its financial backer.
Hanyang’s three major shareholders, including Hanyang University Foundation, signed a definitive agreement on Thursday to sell a 29.59% stake in the brokerage house to KCGI, according to Hanyang Securities’ regulatory filing.
The deal closing came seven weeks after KCGI was named the preferred buyer of the stake. Its deadline was extended by one week as KCGI, better known as an activist fund, struggled to find investors in the deal.
It had haggled over the acquisition price from its initial offer of 65,000 won per share. The bid price was more than four times Hanyang Securities’ market price at the time and 23% higher than the runner-up LF Group’s offer of 53,000 won, according to sources familiar with the situation
KCGI finally cut the price to 58,500 won per share for a total of 220.3 billion won.
OK Financial Group, the parent of OK Savings Bank, will pony up around 120 billion won for the deal. KCGI will raise the remaining amount of money through acquisition financing from Meritz Capital Co., an affiliate of Meritz Securities Co.
The deal will mark the foray into the brokerage sector by both KCGI and OK Financial Group in their attempt to become full-fledged financial services companies.
KCGI, led by shareholder activist Kang Sung-boo, runs two asset management units: KCGI Asset Management Co. and KCGI Alternative Asset Management Co. OK Financial Group specializes in non-banking financing services.
The deal closing is subject to regulatory scrutiny over their eligibility as new controlling shareholders of Hanyang Securities, a small-sized specialist in fixed-income trading.
On Friday morning, the share price of Hanyang Securities tumbled to a three-week intra-day low of 15,280 won, down 8.3%.
Its shares were put on the market to ease liquidity crunches at its property development arm and Hanyang University Hospital.
By Ji-Eun Ha
hazzys@hankyung.com
Yeonhee Kim edited this article
