Mirae Asset drops bid for Hyundai Securities
By Nam Hyun-woo
Mirae Asset Securities said Wednesday that it will not take part in a consortium for a bid for Hyundai Securities.
An official at the major brokerage house said Wednesday that it will not engage in bidding for a 22.56 percent stake in Hyundai Securities after reviewing an investment proposal from LK Partners, a private equity fund.
“Mirae Asset decided to drop its bid for Hyundai Securities after considering the issue from a broader point of view,” said the official. “The company is concerned that its acquisition bid may bring excessive competition to the industry.”
With Mirae’s pullout, KB Financial and Korea Investment Securities are expected to vie for the acquisition of Hyundai Securities.
The move came after Mirae Asset became the top player in the industry after agreeing on the purchase of a 43 percent stake in KDB Daewoo Securities last week.
Mirae has been pursuing an expansion strategy to make inroads into the global market, saying its acquisition of the Daewoo firm is a steppingstone for global expansion.
An industry insider, who asked not to be named, said Mirae Asset has been seeking to become a securities firm with a net worth of 10 trillion won. Mirae’s acquisition of KDB Daewoo Securities will raise its equity capital to some 8 trillion won. If it bulks up further by snapping up Hyundai Securities worth 3.2 trillion won, it can compete with Asia’s leading securities firms, such as Nomura Securities worth 21 trillion won.
The company has been reviewing the proposal from LK Partners until two days before the deadline, saying its decision will be determined at the very last moment. This move has created a complicated outlook on the acquisition of Hyundai Securities, said to be one of the biggest securities firms currently up for grabs.
Hyundai Merchant Marine is the primary owner of the 22.56 percent stake in Hyundai Securities, with the remaining shares held by minor shareholders. For this largest stake, six entities showed their intent to place a bid, with expectations that Korea Investment Holdings and KB Financial Group would be major contenders.
As the outcome of Mirae Asset’s review of Hyundai Securities is pending, concerns were sparked about the possibility that a heated competition would inflate the latter’s price, as well as woes that other firms may lose their ground under Mirae Asset’s dominance.
The price of the share is expected to hover around 400 billion won to 700 billion won, with the company’s market cap reaching 1.6 trillion won.
Market watchers say such issues may have come as a burden to Mirae Asset.
“The company was just reviewing the investment proposal and it seems the market is overreacting,” said the Mirae Asset official.
“We will concentrate on the smooth acquisition of Daewoo Securities.”