KCGI buys control of Hanyang Securities for $166 mn

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 less than its original bidding price, after bringing in OK Financial Group as its financial backer.

Hanyang’s three major shareholders, including the 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 pay about 120 billion won for the deal. KCGI will raise the remaining funds through acquisition financing from Meritz Capital Co., an affiliate of Meritz Securities Co.

The deal will mark a 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 in its property development arm and Hanyang University Hospital.

Write to Ji-Eun Ha at hazzys@hankyung.com
 

Yeonhee Kim edited this article