Mirae Asset may be early gift buyer for KDB Daewoo

Industry

Published: 21 Dec. 2015, 20:37

Mirae Asset may be early gift buyer for KDB Daewoo

KDB Daewoo Securities will likely enjoy a multi-trillion won Christmas gift this year.

The winner of a bidding war to take over the company is expected to be announced on Christmas Eve, and festive season predictions are that Mirae Asset Securities will have more reason to celebrate.

If the package deal includes the 43 percent stake in KDB Daewoo Securities, as well as the wholly-owned KDB Asset Management, Mirae Asset Securities will easily become the country’s No. 1 broker, with an equity capital of 7.9 trillion won ($6.7 billion).

The current No. 1 broker, NH Investment & Securities, has an equity capital of almost 4.5 trillion won.

Korea Development Bank (KBD), the current owner of KDB Daewoo Securities, announced on Monday that it has accepted final bidders. The contenders include KB Financial Group and Korea Investment Holdings as well as Mirae Asset Securities.

According to industry sources, Mirae Asset Securities offered the highest bid in the mid-2 trillion won. KB Financial Group as well as Korea Investment Holdings also bid in the 2 trillion won area, but their offers fell short of Mirae’s bid.

Market insiders earlier speculated that the deciding factor on the bid will be how much the bidders are willing to pay as a management premium. KDB has estimated the book value of the brokerage firm to be worth 1.84 trillion won. But the acquisition price could go up to 2.2 trillion won when the usual 20 to 30 percent management premium is added.

However, some expect that the premium could go up to as much as 50 percent since KB Financial Group, Korea Investment Holdings and Mirae Asset Securities have been fiercely competing for the country’s second-largest brokerage firm.

The market seemed to have bet that KB Financial Group would come out as victor considering the banking group has a stronger and larger financial backup. Some experts estimated that considering how sharply KDB Daewoo Securities’ shares have fallen recently, even 1.5 trillion won would be too much.

Up until April, shares of the brokerage firm traded at around 18,000 won. On Monday, although it rose 3.77 percent compared to Friday’s close, it still traded at 11,000 won.

“Instead of simply looking at the current stock value, the potential value of the company based on its book value is more important,” a KBD official said. “Mirae Asset has placed more significance on the potential of the brokerage firm, while KB Financial Group and Korea Investment Holdings seemed to have lowered their bidding price after taking the recent decline in the stock value into account.”

In its management plan that it submitted to KDB on Monday, Mirae Asset was said to have set its goal of becoming a large-scale investment bank much like Goldman Sachs. The plan is to expand overseas once it takes over KDB Daewoo Securities.

BY LEE TAE-KYUNG, LEE HO-JEONG [lee.hojeong@joongang.co.kr]