Woori Financial Group said on April 30 it will join the race to take over Lotte Card by teaming up with MBK Partners, South Korea’s largest private equity firm by assets under management.
In the newly-unveiled consortium to buy Lotte Card, Woori seeks to acquire some 20 percent stake, while 60 percent stake will go to MBK Partners and the rest will remain in the hands of the Lotte conglomerate, a Woori spokesperson told The Investor.
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“Woori will join the consortium as a financial investor along with MBK Partners,” the spokesperson said.
This came two weeks after its domestic rival Hana Financial Group emerged as the top candidate as the bidding closed on April 19 for the 98.37 percent stake of Lotte Card, valued at some 1.5 trillion won ($1.3 billion). Other strong contenders Hanwha Group and IMM Private Equity walked away from the deal.
Bid manager Citigroup Global Markets Korea Securities plans to choose a preferred bidder in May.
Woori adopted a financial holding company structure early this year and is actively seeking mergers and acquisitions.
Backed by this, it has moved to add nonbanking financial firms in its portfolio and is poised to buy Anbang Insurance Group’s indirect subsidiaries Tongyang Asset Management and ABL Asset Management. It has also signed a memorandum of understanding with family-owned Kukje Trust’s major stakeholders to take over majority stake.
But in the first year of adoption, the financial authorities have ordered the holding company to employ tighter guidelines in assessing its credit risk and financial health as suggested in the Basel II accord.
The group is therefore trying to take advantage of leverages due to such constraints.
An MBK Partners spokesperson said the firm had no knowledge of the matter.
Woori currently owns a credit card subsidiary -- Woori Card which is the sixth-largest in Korea with 9.4 trillion won assets as of end-2018.
The combined asset value of Woori Card and Lotte Card came to 22.6 trillion won as of end-2018, the third-largest following Shinhan Card’s 29.4 trillion won and Samsung Card’s 23.5 trillion won.
The Lotte Card bid is expected to bring about the first billion-dollar transaction in Korea’s credit card industry in 13 years, since Shinhan Financial Group bought LG Card for 7.2 trillion won in August 2006.
By Son Ji-hyoung (email@example.com)