By Kim Tae-gyu
Hana Financial Group has vowed to try its best to attract strategic investors, who tend to put money into long-term plans, in its attempt to take over the Korea Exchange Bank (KEB).
However, the Seoul-based financial holding firm with the main affiliate of Hana Bank under its wings is apparently relying on financial funds that typically focus on short-term returns.
Hana Financial agreed to purchase KEB for 4.7 trillion won late last year from U.S. closed-end fund Lone Star, which bought the bank with broad-based offshore networks in 2003.
``Through dividends and corporate bonds, we secured around three fourths of the 4.7 trillion won necessary to acquire KEB,’’ Hana Financial Chairman Kim Seung-yu told reporters Wednesday.
``We will procure the remaining 1.2 trillion won by issuing rights to financial investors. We plan to finalize the list of investors by next week to complete the funding process.’’
Hana Financial contends that the participation of financial funds raises no problem since they will increase Hana’s capital by investing in the group’s shares, a deal that has nothing to do with debt.
However, the KEB union has a different view. Many members are opposed the takeover, claiming that Hana Financial lacks the financial leeway.
``The fact that Hana failed to attract strategic investors amply demonstrates that long-term investors do not believe in the commercial viability of the Hana-Lone Star deal,’’ KEB trade union spokesman Kim Bo-heon said.
``Another concern is that Hana may sign a secret deal promising a certain profit to draw in reluctant financial funds. In this case, Hana’s alleged equity finance is just tantamount to debt.’’
Kim added that no more hedge funds will get involved in the domestic banking industry because of the many hitches they experienced over the past decade.
A few private-equity funds are on the lips of market observers in the fund-raising scheme for KEB although Hana refuses to confirm any details.
In the face of such criticism, Hana Chairman Kim said that the group has contingency measures in case the worst-case scenario becomes a reality _ financial funds dispose of their shares en masse at the same time.
``Some of funds promised not to sell Hana shares, which will be issued, over a specific period of time. We will also plan to designate alternative investors that can scoop up our shares in bulk if they circulate too much,’’ Kim said.
In the meantime, Hana Financial agreed to form a strategic alliance earlier this week with China Merchants Bank, one of the six largest banks by assets in the world’s most populous country.
