Do not go gentle into that good night, old age should burn and rave at close of day; Rage, rage against the dying of the light, though wise men at their end know dark is right, because their words had forked no lightning they, do not go gentle into that good night.
Lotte finalizes sale of financial units
Lotte's financial units in Jung-gu, Seoul / Courtesy of Lotte Group
By Jhoo Dong-chan
By Jhoo Dong-chan
Lotte Group signed stock purchase agreements (SPAs) Friday with private equity firm (PEF) JKL Partners and the MBK Partners-Woori Bank consortium, respectively, to sell Lotte Insurance and Lotte Card.
Hotel Lotte and other group units, which hold stakes in the two financial units, held board meetings Friday and approved the deals, a Lotte official said.
“The group signed SPAs with JKL Partners and the MBK Partners-Woori Bank consortium shortly after the board meeting Friday.”
JKL Partners has bid 427 billion won ($359.1 million) for a 58.5 percent stake in Lotte Insurance, which is estimated to be valued at 730 billion won. Lotte Group had planned to sell its entire 58.5 percent stake to JKL Partners, but decided to hold onto a 5 percent stake in the non-life insurer.
The total sale price is estimated at around 400 billion since JKL Partners is acquiring a 53.5 percent stake, not the entire 58.5 percent stake.
JKL Partners said it will issue new stocks to raise up to 300 billion after it concludes the acquisition. The measure is believed to raise Lotte Insurance's risk-based capital (RBC) ratio toward 200 percent.
As of the end of March, the non-life insurer's RBC ratio stood at 163 percent.
The Financial Supervisory Service requires insurers to keep their RBC ratios at above 150 percent. But for financial market stability, they are suggested to keep it at 200 percent.
Separate from its sale of Lotte Insurance, the group also signed an SPA with the MBK Partners-Woori Bank consortium to sell Lotte Card on the day.
Sources said the consortium bid about 1.34 trillion won to acquire an 80 percent stake in the group's credit card unit. Of the 80 percent stake, MBK Partners owns 60 percent and Woori Bank 20 percent.
Lotte Group said it will hold the remaining 20 percent stake in the card firm.
It is almost certain MBK Partners will sell the card firm at some point in the future, and observers claim Woori could be a possible candidate to acquire it at that time.
A Woori Bank official denied this immediately.
Due to the fair trade law, Lotte Group is required to conclude the sale of its two financial units by October to meet the country's non-financial holding structure guidelines.