Big M&A Opportunities
The Korea Development Bank (KDB) will sell off some financial subsidiaries under the KDB Financial Group such as KDB Daewoo Securities, KDB Capital, and KDB Life Insurance in January next year.
Other than financial subsidiaries, all corporate equity owned by KDB including Daewoo Shipbuilding & Marine Engineering (DSME) and Korean Aerospace Industries (KAI) will also be sold by next year.
The government agreed to the decision of KDB to sell of its equity in those subsidiaries by next year if possible. The structures of disposal will be divided into package deals in which several subsidiaries are sold off together, and some separate deals by company.
According to the financial sector on Sept. 10, due diligence to combine KDB and the Korea Finance Corporation will be completed at the end of this month. Integration of the loan portfolios will start next month by the earliest. All of the assets and debts will be combined by November, and all the other remaining things will be integrated by the end of the year.
Moreover, an investigation to check the demand for financial subsidiaries of KDB including KDB Daewoo Securities, KDB Asset Management, KDB Capital, and KDB Life Insurance will begin in January next year. After the investigation on demand, companies to be sold will be divided into package deals and separate deals. Then, a three stage sale process will be reviewed. This is very similar to the selloff of Woori Financial Group. KDB Daewoo Securities, KDB Asset Management, and KDB Life Insurance are likely to be put together as a package.
The selloff of KDB Life Insurance has been started again, but whether it can be sold is not clear. Even KDB is skeptical, internally. Accordingly, depending on the sales status, limited partners (LP) of KDB PEF, major shareholders of KDB Life Insurance, will be asked whether or not the expiry of funds shall be extended at the end of this month by the earliest. By elongating the expiry of KDB PEF, which is scheduled for February next year, KDB Life Insurance might be sold off together with KDB Daewoo Securities as a package.
KDB Capital will be under review to determine whether it is to be sold separately or remain as one of KDB’s subsidiaries
KDB Infra will exceptionally remain as one of KDB’s subsidiaries, as it would better for KDB Infra to stay in KDB group to be engaged in national fundamental businesses such as investment in social overhead capital (SOC).
All Corporate Equity to be Sold Off as Well
The government is also considering selling off all of the corporate equity owned by KDB, including DSME. Currently, KDB holds 31.50 percent of DSME and 0.34 percent of KAI. Korea Finance Corporation has 26.41 percent of KAI. Equities of companies of which corporate bonds have been converted to stocks through restructuring will be normalized first and sold off together with creditors by stage.
The equities of these two companies will be sold off by next year. When selling off DSME, the 12.2 percent owned by Financial Services Commission will be combined and sold off together. With KAI, Hyundai Motor and Samsung Techwin each have 10 percent, and their portions will be combined and sold off together as well.