KB Financial jumps into race to acquire Lotte Capital

By Lim Chang-won Posted : February 12, 2019, 16:34 Updated : February 12, 2019, 16:34

[KB Financial Group]


SEOUL -- KB, a major financial group in South Korea, jumped in the race to acquire Lotte Capital, a profitable financial services unit of the Lotte Group, saying it would strengthen its non-banking business such as private and car installment financing.

Shinhan Financial stayed away, allowing KB Financial to become a leader in the preliminary bidding on Tuesday. Other potential buyers included MBK Partners, a private equity firm.

Lotte Capital is the fourth largest player in South Korea's capital market after Hyundai Capital, KB Capital and Hyundai Commercial. It provides private financing, leasing, corporate financing and loans, lease financing, family loans, discount bills and other financial services.

Lotte, the fifth-largest conglomerate in South Korea, has put three key financial units up for sale in an effort to realign its structure, enhance corporate governance and strengthen the leadership of group chairman Shin Dong-bin. The three units are Lotte Capital, Lotte Card, a credit card company, and Lotte Insurance.

Lotte Card and Lotte Insurance have attracted a number of bidders, including Hana Financial and MBK.

In October 2017, Shin launched Lotte Corp. and secured firm group-wide control by holding a 13-percent stake in the holding company. The realignment of group structure would be completed after the holding company absorbed more affiliates, including Hotel Lotte.

In February last year, a district court in Seoul sentenced Shin to two years and six months in prison on charges of bribing Choi Soon-sil, the crony of South Korea's ousted ex-president Park Geun-hye. After the chairman was released in October when an appeals court suspended his sentence, the group responded with an aggressive plan to reactivate investments, which have been delayed during Shin's eight-month absence.
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