Private equity firms Affinity Equity Partners and Baring Private Equity Asia (BPEA) are buying a combined 1.2 trillion-won ($1 billion) stake in Shinhan Financial Group, according to industry sources on September 3.
The two Asia-based firms agreed to invest 600 billion won each in newly issued common shares of the South Korean financial conglomerate.
The deal meets the needs of both sides: Affinity and BPEA were looking for investment opportunities in the South Korean financial services sector, while Shinhan Financial was planning to increase capital and was also exploring a strategic partnership with global private equity firms, sources said.
Both Affinity and BPEA have been active in the South Korean mergers and acquisitions market with a strong focus on the financial services sector. This could be one of the reasons Shinhan Financial has chosen to partner with them, industry watchers said.
Affinity’s portfolio in the country’s financial services segment includes Kyobo Life Insurance, Hyundai Card and Hyundai Commercial. Most recently, the firm invested 1 trillion won in SSG.com, the online shopping arm of retail giant Shinsegae Group, in partnership with BRV Capital Management in March 2019. Affinity is expected to use its fifth Asia buyout fund, which raised $6 billion in 2018, to invest in Shinhan Financial.
BPEA acquired Acuon Capital, a South Korean consumer finance company, and its subsidiary Acuon Savings Bank for about 700 billion won in August 2019. Its other South Korean portfolio companies include Logen, a parcel delivery company, which was acquired by the firm for 150 billion won in 2013 and is currently seeking a buyer.
Shinhan Financial and the two private equity firms are expected to explore investment opportunities in South Korea and abroad based on their strategic partnership, industry watchers said. (Reporting by Hye-ran Kim)