In the largest ever foreign investment in South Korea, Citigroup said today it would buy KorAm Bank for $2.7 billion to extend its push into emerging markets.
The world's largest financial services company beat out Standard Chartered to buy South Korea's sixth-largest bank from a consortium led by US private equity firm Carlyle Group and JP Morgan, which more than doubled its money on its investment.
Citigroup will buy a 37 per cent stake from a group led by Carlyle and JP Morgan Chase marginalising UK-based bank Standard Chartered which owns a 9.8 per cent stake in Koram and had been considered favourite to buy the bank.
Citigroup will buy the US consortium's 36.6 percent KorAm stake and tender for the remaining shares at 15,500 won per share in cash, totalling 3.18 trillion won ($2.7 billion). The consortium got a return of 2.3 times its original KorAm investment of $430 million in 2000.
The price represented a 6.7 per cent premium over the average closing price of KorAm's stock for the last 30 trading days, but was slightly below Friday's close of 15,800 won.
New York-based Citigroup has not followed US rivals such as Bank of America and JP Morgan in bulking up on consumer bank acquisitions in its domestic market. Instead, it said it's looking for growth in Asia's developing markets after already buying banks in Mexico and Poland.
"It's a large under-served market from our point of view. The Korean financial services market is only opening now," Mr Deryck Maughan, chief executive of Citigroup International said.
AFP