SEOUL, March 6 (Reuters) – South Korea plans to ease rules
to make mergers and acquisitions easier for private equity firms
and local companies in a bid to facilitate the sale of an
estimated 10 trillion won ($9.34 billion) in assets of
cash-strapped local conglomerates.
The plans, announced by seven ministries and led by the
country’s finance ministry on Thursday, are geared chiefly
toward bolstering appetites for a slew of local distressed
assets awaiting sale in sectors like shipping and finance.
The volume of M&A; activity in South Korea has seen its
strongest start to the year since 2008, rising 18 percent to
date.
Under the planned changes, South Korea would allow private
equity firms to acquire a company’s entire business division,
for example a lucrative shipping line, rather than restricting
the firm to buying a stake in the entire company. That would
make it easier to cherry-pick attractive businesses.
Private equity-backed companies will also be able to list on
the local stock exchange, unlike in the past when a strict
interpretation of rules on investor protection blocked such
companies from going public.
Private equity-backed M&A; deals in South Korea have had a
bumper year so far, led by KKR and Affinity’s $5.8 billion sale
of Oriental Brewery to Anheuser Busch InBev SA in
January, plus the $1.93 billion sale of Tyco’s South Korean home
security business to Carlyle Group LP on Monday.
Seoul wants to facilitate what the ministries estimate as 10
trillion won in assets expected to be sold from cash-strapped
conglomerates like the finance units of Hyundai Group,
the port business owned by South Korea’s largest shipping line,
Hanjin Shipping, and bulk shipper Pan Ocean
, which is currently under court receivership.
The ministries said they expect to begin seeking
parliamentary approval or have most of the changes adopted by
the second half of this year.
($1 = 1070.95 Korean won)
(Reporting by Joyce Lee; Editing by Matt Driskill)
