South Korea’s United Asset Management Company (UAMCO) has bought stakes in distressed companies in the non-financial space from the state-run Korea Development Bank (KDB) in partnership with Helios Private Equity (Helios PE).
The country’s largest bad debt manager completed a collective purchase of stakes in 90 non-financial firms worth about 20 billion won ($16.3 million) from KDB, sources said on May 29. For the acquisition it formed a fund which will be jointly managed by Helios PE.
KDB had initially considered selling its stakes in 107 mid-sized firms and startups, all of which have been held by the bank over the past 10 years or more. An aggregate book value of these firms stood at 47.7 billion won, significantly down from the 114.6 billion won value at which KDB acquired them.
After negotiating with KDB, UAMCO agreed to exclude 17 firms from a lump sale and buy stakes in the remaining 90 firms for about 20 billion won with roughly a 50 percent discount.
UAMCO was considered the only potential buyer for these stakes even at an early stage of the sale process because few asset managers in the private sector would want to take them over. The bad-debt management firm, jointly set up by major local banks in 2009, had also struck a similar deal with KDB in 2017.
But some industry watchers are critical of these kinds of transactions, saying UAMCO would have had no other option but to buy non-performing assets from KDB which is one of the major shareholders in the firm with a 14 percent stake.
“There were concerns within [UAMCO] about investing in KDB’s non-performing assets because they are difficult to manage and exit,” an industry insider said. (Reporting by Se-hun Jo)