Online-only lender K bank is proceeding with plans to increase its capital base by as much as 600 billion won ($526 million), with many financial investors showing interest.
Four financial investors – two domestic and two foreign private equity firms – reportedly submitted their proposals to participate in the rights offering in the final round of bidding held at the end of February, industry sources said on Friday (March 5).
K bank has also been inviting pension funds and mutual aid associations to join the deal. It plans to raise around 400 billion won from new investors and 200 billion won from KT’s subsidiaries, including BC Card. The process is likely to continue until the end of June.
Some market insiders doubt that the process will go as planned because domestic PE firms have to create a project fund, which lowers the certainty of a deal being seen through. K bank also has to deal with four different new investors, raising 100 billion won from each, making it difficult to reach an agreement.
It is also unclear whether K bank will provide protection against downside risk for financial investors. Some potential buyers pulled out of the deal due to the lack of downside protection during the marketing stage.
Concerns remain that K bank could act as a favorable shareholder for its largest shareholder KT in the future, even though it now appears likely to attract new investors. The latest deal is said to be led by KT, which controls BC Card. Financial investors could accept conditions related to their exit from KT and support KT on issues regarding K bank’s businesses, industry watchers said.
In this case, a balance between shareholders could be broken and a device is needed to keep the largest shareholder in check. BC Card currently exercises voting rights of up to 34% in accordance with the law governing internet banks.
K bank has completed seven rounds of recapitalization since it was founded with capital of 250 billion won in 2017. The largest shareholder is BC Card, with a stake of 34%, followed by Woori Bank with 26.2% and NH Investment & Securities with 10%. (Reporting by Ar-rum Rho)