Lone Star to exit Korea Exchange Bank

Lone Star and Commerzbank are poised to exit from Korea’s fifth-largest lender in a highly profitable move that has been anticipated since late last year.

Lone Star, the US-based private equity fund, has announced its appointment of Citigroup as adviser to sell its controlling stake in Korea Exchange Bank (KEB), Kim Ji Ho, Lone Star’s spokeswoman in Seoul, said in a statement. 
 
Lone Star’s 50.53 percent stake in Korea Exchange Bank, acquired in October 2003 at 1.38 trillion won ($1.38 billion), is now valued at close to $5 billion. Commerzbank intends to sell its 14.6 percent stake, valued at $1.5 billion.
 
Kookmin Bank, Korea’s largest lender, and Hana Financial Group, the country’s fourth-largest, have expressed their intentions to bid for KEB, according to Korean media reports.
 
The pending stake sale comes as no surprise. Talk of Lone Star’s exit emerged late last year following the expiry of the ‘lock-up period’ in October, two years after the Dallas buyout firm had bought into KEB.
 
Just before the lock-up period ended, Lone Star’s former head of Korean operations Steven Lee resigned after being investigated by tax authorities. Lee found himself in the media spotlight at a time when Korea’s National Tax Service was investigating alleged tax evasion by foreign funds operating in the country.