ST Leaders Private Equity (ST Leaders PE) is expected to sign a share purchase agreement soon for a 97.5% stake in Hyosung Corporation’s financing arm Hyosung Capital soon, industry sources said on Friday (October 23).

Named by Hyosung Corporation as the preferred buyer on September 15, ST Leaders PE reportedly will pay a little less than 390 billion won ($346 million) for the company.

Hyosung Corporation needs to complete the sale by the end of December to comply with local regulations that forbid a non-financial holding company from owning a stake in a financial services company. Private equity firms and foreign investors,  including China’s Ping An International Financial Leasing and Japan’s ORIX Capital and Shinsei Bank, participated in the public bidding. ST Leaders PE had a competitive edge in both price and non-price terms.

The sale agreement is likely to be signed following a month-long negotiation between Hyosung Corporation and ST Leaders PE. The PE firm is expected to acquire old shares of Hyosung Capital first and later carry out a rights offering.

ST Leaders PE is considering purchasing new shares along with the old shares after the acquisition of Hyosung Capital in a bid to take over more firms through a bolt-on strategy.

Hyosung Capital is valued at approximately 1 times the book value of the company’s equity in the latest deal, which is lower than the targeted valuation of 1.2 times the book value of its equity.

ST Leaders PE has secured the Korean Federation of Community Credit Cooperatives as an anchor investor in the project fund that will be used for the acquisition. The total acquisition price, including the money the PE firm has to spend to acquire Hyosung Capital’s new shares, amounts to 450 billion won. (Reporting by Ar-rum Rho and Ik-hwan Choi)