Woori Financial to acquire Aju Capital for W572.4b

Woori Financial Group said on Friday that its board of directors had agreed to buy a controlling stake in non-bank lender Aju Capital from private equity firm Well to Sea Investment for 572.4 billion won (507.2 million of dollars).

This decision announces the decision of the fourth South Korean banking group to strengthen its non-banking activities and diversify its business portfolio.

According to Friday’s filing, Woori’s board of directors has agreed to acquire 42.6 million ordinary shares, a 74.04% stake, in the company dedicated to installment loans for auto purchases. and other financing services for consumers and businesses.

Aju Capital is the sixth largest installment lender here by total assets.

The expected purchase price – 13,435 won per share – is slightly lower than Aju Capital’s closing price of 13,450 won on the country’s main stock exchange, Kospi. Woori said the purchase price is subject to change.

Woori did not say when the deal is expected to close, as the timeline for the financial regulator’s review has yet to materialize.

Once the acquisition is complete, Woori will control not only the installment loan provider, but also its wholly owned lending subsidiary, Aju Savings Bank.

This comes three years after Well to Sea Investment bought a controlling stake in Aju Capital in June 2017.

Woori revealed in his disclosure on Friday that the banking group and Well to Sea signed a right of first refusal in 2017 for the Aju Capital property.

Under this provision, Woori or a third party appointed by Woori is granted the exclusive right to purchase Aju Capital shares held by Well to Sea. Woori also supported the capital of a special purpose company Well to Sea for its acquisition of Aju Capital in 2017.

Aju Capital reported net profit of 101.6 billion won in 2019, up 11.7 percent year on year, according to its consolidated financial report. This is in part attributable to the improvement in its credit rating by local credit bureaus, from “A” to “A +”, which has enabled the company to obtain capital at lower cost.

Amid fierce competition with rivals such as KB, Shinhan, and Hana, Woori has engulfed financial services companies to strengthen its non-banking business and diversify its revenue streams in recent years. Only last year, Woori took over property management company Kukje Trust and asset management companies Tongyang Asset Management and ABL Asset Management. Woori also bought a minority stake in Lotte Card, alongside private equity firm MBK Partners.

By Son Ji-hyoung ([email protected])


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