[THE INVESTOR] LF Group is set to acquire a majority stake in the country’s third-largest realty trust KORAMCO REITs & Trust, tapping into the real estate finance business, industry sources said on Aug. 24.
The group is seeking to diversify its fashion-focused business and has been picked as preferential bidder to acquire a 46 percent stake in KORAMCO for 160 billion won (US$14.24 million). Of the amount, 5.43 percent is held by President Lee Kyu-sung and 40.57 percent by favorable shareholders. LF will also take over KORAMCO Asset Management, 100 percent owned by the parent firm.
The deal is the largest acquisition by the fashion group, which was spun off from LG Group in 2007.
LF will conduct due diligence for a month before signing a stock purchase agreement. The deal is also subject to the government’s screening and approval.
According to industry sources, LF is also interested in acquiring the remaining stake held by financial institutions including Woori Bank (12.2 percent), Korea Development Bank (11.7 percent), Kiwoom Securities (9.94 percent) and Korean Reinsurance Co. (9.68 percent).
Founded in 2001, KORAMCO recorded 124 billion won in sales and 66.1 billion won operating profit in 2017.
LF’s sales reached 1.6 trillion won, 90 percent of which was generated from its fashion business. By acquiring KORAMCO, LF can see an 8 percent increase in sales and 60 percent in operating profit.
KORAMCO made headlines in June when Platform Partners Asset Management recommended it to replace Macquarie Korea Asset Management from managing the only listed infrastructure fund in the country’s first instance of shareholder activism by a Korean company targeting an overseas firm.
Following the news, shares of KOSPI-listed LF rose almost 2.5 percent in morning trading.
By Park Ga-young (firstname.lastname@example.org)