South Korea’s Woori Bank that became fully privatized last year will acquire a major stake in Aju Capital Co. and Aju Savings Bank through a private equity fund as a part of its plan to become a holding entity.
According to multiple sources from the banking industry on Tuesday, a special purpose company (SPC) invested by Woori Bank and managed by Weltusi Investment Co. will sign a stock purchase and sale agreement with industrial conglomerate Aju Group to purchase 74.03 percent of Aju Capital shares. The purchase price is estimated to be worth 310 billion won ($274.7 million) at 6.4 percent discounted from Aju Capital’s closing price of 7,800 won. The bank will report the transaction to the board on Thursday.
Woori Bank will invest 100 billion won and become the largest investor while Kiwoom Securities Co. and Korea Investment & Securities Co. that are oligopolistic stockholders of Woori Bank will each invest 40 billion won and 10 billion won eyeing synergy after the merger with Aju Capital. Shinyoung Securities Co. and IBK Capital Corp. will also invest 30 billion won and 20 billion won, respectively, in the SPC, raising the total investment amount to 200 billion won.
Woori Bank plans to raise the remaining 110 billion won by collecting funds from institutional investors including pension funds, which will be managed by Kiwoom Securities and Korea Investment & Securities.
The latest stock purchase agreement grants Woori Bank the option to buy back the shares. The fund that has been created for the acquisition purpose will mature after two years, and Woori Banks has the priority right to buy back the shares when investors disband the fund.
The move will help Woori Bank transform smoothly into a holding company structure as it would be able to exercise its right of first refusal after two years and buy more shares in Aju Capital to incorporate the company into its own unit. If Woori Bank fails to transform into a holding company, it does not have to exercise the rights and can sell Aju Capital shares to a third party.
The stock purchase agreement, meanwhile, also includes buying shares of Aju Savings Bank, which is wholly owned by Aju Capital. Last year, the savings bank raised 8.8 billion won worth of net income. The latest purchase makes Woori a potential owner for the capital firm and savings bank.
By Park Joon-hyung
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