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Friday July 02, 10:37
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JP Morgan drops bid for Korean fund managers
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A consortium of Kookmin Bank, South Korea’s largest lender, and JP Morgan has dropped out of bidding for the country’s two state-run asset managers, as competition heats up for the sale.
Five financial groups have submitted bids for Daehan Investment & Securities (DIS) and Korea Investment & Securities (KIS), the country’s biggest and third-biggest asset managers controlling a quarter of South Korea’s $140bn fund management market.
US insurer AIG has teamed up with Carlyle Group, the US private equity group, to bid for the asset managers while Goldman Sachs has formed a consortium with Hana Bank, South Korea’s fourth-largest lender.
Prudential, the UK insurer, was also among the five bidders. It has joined forces with buyout fund Olympus Capital and Seoul Securities, a small South Korean brokerage owned by US hedge-fund manager George Soros.
Woori Financial Group and Donwon Financial Holding, two other local institutions, also made bids. It was not clear why Kookmin and JP Morgan pulled out of the bidding but financial sources said they withdrew interest after they found bigger-than-expected losses at the two asset managers after due diligence. The two companies declined to comment.
Foreign bidders see the sale of the two asset managers, jointly worth more than $1bn, as a chance to win access to the world’s 11th-largest asset management market.
“They are trying to enter the market first, as interest for indirect investment products grows in the country,” said Jason Yoo, an analyst at Samsung Securities.
Korean banks are keen to move into asset management to diversify from their core banking operations, which are suffering from record low interest rates.
The sale of KIS and DIS is an important part of South Korea’s efforts to restructure its troubled asset management sector, which has been slow to recover from the Asian financial crisis six years ago.
KIS and DIS have been under state control since the government bailed them out following the crisis. The government is expected to inject an additional Won2,800bn ($2.4bn) into the two companies to clean up their remaining bad assets ahead of the sales.
(FT.com)
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