Singapore-based ARA Asset Management Ltd. has gained the upper hand in an auction to take over its smaller South Korean rival Consus Asset Management Co. specializing in alternative investments.
According to the investment banking (IB) industry on Thursday, Consus Asset Management and its sale advisor Deloitte Anjin LLC have decided to pick ARA as a preferred bidder, and the final decision will be made on June 25 at a board meeting. Korean private equity fund Whale Investment is expected to be named as the second preferred bidder.
ARA is reported to have offered 20 billion won ($17.6 million) to 30 billion won for the Korean peer, according to sources. But the sellers are said to be taking into account of not only the price but also various other factors to prevent the deal from falling through during the country’s financial authorities’ review. Under the current financial rules in Korea, a buyout deal of a local financial company needs approval from the local financial authority on the change of its largest shareholder.
The success of the sale depends on how much stake in Consus ARA would take over, according to a source from the IB industry. Consus shareholders are said to be demanding that a future biggest stakeholder should take over a sizable stake in the company that can help the company’s capital significantly improve. If there is a problem in the process of receiving financial authority’s approval or setting the terms of the deal, the priority right to negotiate the deal would be given to the second preferred bidder.
ARA, a real estate investment management company partly owned by Li Ka-shing, Hong Kong’s richest man and chairman of Ceung Kong Property Holdings, is managing 24 trillion won worth fund across China, Malyasia and Australia. The company has been frequent in the local property market by taking over Alpharium Tower in Pangyo, south of Seoul, for 520 billion won last year. It is expected to expand its investment in Korea after the acquisition of Consus.
Consus Management was founded in 2004 by Kim Young-jae, a former spokesperson of the Financial Services Commission in Korea and current chief executive of the company, as an asset manager specializing in alternative investments. The largest shareholder is Hanil Cement Co. owning 49 percent stake.
By Chun Kyung-woon and Song Gwang-sup
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