Hanyang Securities stake draws bids without sale manager

Hanyang Securities Co. has received preliminary bids from four to five South Korean companies or consortia for its 11.3% stake after its controlling shareholder Hanyang University Foundation privately contacted a few potential bidders without hiring a sale manager, according to people familiar with the matter on Wednesday.

The university foundation has put the stake, worth 23 billion won ($17 million) based on its market capitalization, up for grabs to inject fresh liquidity into its hospital and property development firm mired in accumulated losses.

Its bidders include Seoul-based private equity firm KCGI, a consortium between KL & Partners and HXD Hwasung Development Ltd. and fashion retailer LF Group, said the sources.

KL & Partners was founded by former finance ministry official Kim Ki-hyun in 2015. One of its major portfolio companies is Mom’s Touch, a Korean chicken burger chain, it acquired in 2019.

HXD Hwasung Development, split out from Kospi-listed HS Hwasung, is a property developer based in the city of Daegu, about 250 kilometers southeast of Seoul.

An LF Group official told Market Insight, the capital market news outlet of The Korea Economic Daily, that it is interested in financial services companies, including a brokerage firm, but declined to confirm whether it submitted a bid for a stake in Hanyang Securities.

For a speedy sale of the stake, Hanyang skipped the due diligence process for the preliminary bidders and will only allow a preferred buyer to carry out due diligence on Hanyang Securities, according to the sources.

In the absence of a sale manager, it also contacted companies or investors who had expressed interest in Hanyang Securities in private.

That drew complaints from potential bidders and led some of them to give up on joining the race.

Moreover, some investment bankers questioned why Hanyang University Foundation offered only an 11.3% stake in the brokerage unit, instead of offloading all its 16.29% stake that could bring in a management premium.

An M&A expert said that retaining a 4.99% stake in Hanyang Securities seemed to reflect the university foundation's wishes of buying back its control in the future under a call option with a potential buyer.

Write to Jong-Kwan Park and Ji-Eun Ha at pjk@hankyung.com
 

Yeonhee Kim edited this article