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Shinhan beats private equity to buy LG Card

Shinhan Financial Group of Korea has narrowly beaten Hana Bank and MBK Partners to a $7 billion acquisition of Korea’s LG Card Co.

Shinhan Financial Group, Korea’s second largest financial services group, has been selected the preferred bidder for LG Card Co, the second largest credit card issuer in Korea.

The transaction, worth approximately KRW 6.7 trillion ($7 billion; €5.4 billion), involves the purchase of a 78 percent stake in LG Card, a spokesman for Shinhan said. Shinhan, which is one of LG Card’s creditors, already holds a 7 percent stake.

Shinhan offered approximately 68,000 won a share. Hana Bank and MBK Partners, a Seoul-based private equity firm, submitted the second highest bid, according to several media reports, at just 500 won less. The third bidder was National Agricultural Cooperative Federation. Standard Chartered pulled out of the race earlier in August.

LG Card was put up for sale by Korea Development Bank and 13 other creditors. The syndicate obtained a combined 81 percent stake in the business after coming to its rescue in 2004 when LG was struggling with rising card repayment defaults.

Korea Development Bank, which has the largest equity stake in LG Card, and JP Morgan jointly managed the sale. Shinhan is expected to conduct a second round of due diligence in September before finalising the deal in October, the company spokesman said.

National Pension Service of Korea will participate in the deal as a financial investor, the spokesman said. To finance the acquisition, Shinhan is planning to raise debt and issue preferred shares, which NPS will likely subscribe to, he said.