Woori Financial Group makes offer for Daol Investment

A promotional digital display on Woori Financial Group building in central Seoul on Friday. [YONHAP]

Woori Financial Group submitted a letter of intent to acquire a majority stake in Daol Investment, Woori confirmed Sunday.

Woori did not confirm the details of the possible acquisition, including the price and the number of shares.But Daol is seeking to sell 52 percent of the venture capital company for at least 200 billion won ($158 million), according to local media reports.

Woori “did submit a letter of intent, but no progress has been made since,” said a company spokesperson.

If the deal goes through, Woori will be acquiring the investment firm from Daol Investment & Securities.

Woori said it will strengthen non-banking businesses this year.

“When the market environment grows difficult, foundation for sources of profit need to be strengthened through enhancement of market position of the core business of subsidiaries,” said Woori Financial Group Chairman Son Tae-seung in a new year address last week.

Daol is a Kosdaq-listed company. Its share is down more than 30 percent on year.

Daol Investment & Securities has been struggling from the recent liquidity crunch caused by the rapid rate increases and default of a company related to the Legoland Korea Resort developer last year. He added Woori Financial Group will “speed up on expansion of its non-banking business portfolio, like securities, insurance and venture capital, that has been put off due to market instability last year.”

Daol accepted voluntary retirements from its employees in November, while not extending the contacts with some workers in the bond department.

The company is also selling non-essential assets, including Daol Credit and a Thai unit to “preemptively secure liquidity."

Daol signed an agreement with Mason Capital Management and Lead Capital Management last week to sell its entire stake in the credit rating subsidiary for 13 billion won.

Daol is also seeking to sell Daol Asset Management, local press reports said citing sources from investment banks.

Daol is ready to sell the unit once it finds an appropriate buyer due to the liquidity crisis, a source from the investment banking told the outlet edaily.

But Daol denied the rumor, saying there is no plan.

BY JIN MIN-JI [jin.minji@joongang.co.kr]