US private equity fund Lone Star confirmed today it was in exclusive talks with HSBC to sell its 51 per cent stake in Korea Exchange Bank (KEB).
The confirmation comes a day after HSBC said it was in talks to buy a majority stake in KEB, a move that would boost its profile in Asia's third-biggest banking market but could flush out domestic counterbidders, including top South Korean bank Kookmin.
An industry source expects Lone Star to sign a preliminary agreement with the London-based bank soon, allowing both sides to continue exclusive talks on the stake, with a market value of $4.8 billion, for 90 days prior to a final deal.
Shares in KEB were up 2.5 per cent at 14,300 won earlier today, beating a 0.3 per cent rise on the broader market
The US private equity house's legal battle in South Korea over its $1.2 billion purchase of KEB in 2003 has delayed the bank's sale. Lone Star last year cancelled a $7.3 billion offer from Kookmin to buy 71 per cent of KEB.
It also ended talks this year with Singapore's DBS Group Holdings, with Southeast Asia's largest bank hinting it walked away from KEB because of ongoing legal issues.