Foreign and domestic investors are stepping up competition for prime financial assets here amid ongoing consolidation in South Korea's financial sector, officials said yesterday.
An investment fund managed by US financier George Soros has submitted a letter of intent to take over LG Investment Securities, according to the state-run Korea Development Bank, a key creditor. The sale of LG Investment has also attracted Woori Financial Group and two other foreign investment funds, it said.
"We hope to complete the sale by the end of June, although our timetable is flexible," KDB official Kim Hyong-jong said.
Major South Korean lenders are also pushing ahead with plans to acquire non-banking institutions in the wake of US giant Citigroup's acquisition of Koram, the country's sixth largest lender.
Citigroup's inroads into the nation's banking industry prompted top domestic lenders to acquire other institutions to bolster their non-banking business.
Kookmin Bank and Woori Financial Group have submitted preliminary bids for two government-owned fund managers -- Daehan Investment Securities and Korea Investment Securities.
South Korea's fourth largest lender, Hana Bank, said yesterday it has submitted a preliminary bid for the two companies.
"We handed in a letter of intent with regard to the acquisition of Daehan Investment Securities and Korea Investment Securities," Hana Bank said.
Other potential bidders include American International Group, HSBC Holdings Plc and Dongwon Financial Holding.
"We submitted letters of intent to acquire Daehan Investment and Securities or Korea Investment and Securities to the deal manager Morgan Stanley Dean Witter Asia Ltd on April 12," Dongwon said in a statement.
The economic newspaper Herald Business reported the government plans to select three or four bidders for each asset manager by next Tuesday, with preferred bidders to be named on June 15. The government is considering selecting two preferred bidders for each company, it said.
The two companies have been restructured with public funds since the Asian financial crisis forced an overhaul of the financial industry. The crisis forced the close of many debt-stricken financial institutions, while public funds were put into major investment firms and security houses.
In February, US fund Prudential Financial became the largest foreign-owned asset manager in South Korea by sealing the US$300 million purchase of Hyundai Investment and Securities. Hyundai Investment was the third largest investment management company in the country with a market share in excess of 10 percent.
The government has vowed to shed its holdings in Daehan Investment and Korea investment this year, although their financial structure worsened last year because of an accounting fraud.
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