Lone Star agrees $4.2bn KEB exit

It’s third time lucky for Lone Star as the Dallas-based private equity and real estate giant once again seeks an exit from the Korean bank.

Dallas-based Lone Star is poised to exit its investment in Korea’s Korea Exchange Bank (KEB) following two failed attempts to sell its stake in the past five years.

According to multiple reports, Hana Financial Group, the Korean holding company behind Hana Bank, has said it will buy a 51 percent position in KEB for up to 4.75 trillion won (€3.09 billion; $4.2 billion). The bid represents a 15 percent to 18 percent premium on KEB’s closing shares today.

The Wall Street Journal said a deal would see Hana become Korea’s third-largest financial group with more than 300 trillion won in assets under management.

News agency Reuters said Hana chairman Kim Seung-yu would complete the deal with Lone Star in London, where the firm’s founder John Grayken has a home. The bid would beat a rival offer from Australia and New Zealand Banking Group which indicated it had no plans to outbid Hana.

Reuters suggested Hana would seek equity finance from Lone Star’s private equity rivals including Carlyle and Kohlberg Kravis Roberts & Co to help fund the deal.

Lone Star bought its 51 percent position in KEB for $1.2 billion in 2003. The firm tried to exit its investment to Kookmin Bank for $7.3 billion in 2006 but the attempt failed. A further effort to sell the stake to HSBC for $6.3 billion in 2008 also failed.

Both deals collapsed over legal and valuation conflicts.