Monday December 7, 2009
South Korea lures foreign investors with merger deals
SEOUL: South Korea plans to step up efforts to invite foreign investors by promoting merger deals and easing regulations, the government said yesterday.
The government said it would actively induce sovereign wealth funds and financial investors such as global venture capitals and private equity funds to buy a stake in South Korean companies put on sale.
Foreign investors with advanced technology and high contribution to the economy or in value-added service sectors would be favoured most and granted with various incentives, including tax benefits, it said.
Separately, the government will provide support for local financial companies to explore overseas businesses while encouraging foreign firms to list their shares on the Korea Exchange.
Last week it was reported that South Korea’s banks were actively hunting new M&A deals in a bid to get a head start in 2010, as appetite for acquisition-linked financings is revived.
With a pipeline of deals worth US$5bil-equivalent stretching over the next six months, banks are jostling for position and the opportunity to lend.
Attention is currently focused on Kumho Asiana Group’s sale of its controlling stake in Daewoo Engineering & Construction (Daewoo E&C), which is expected to fetch US$2.6bil and could lead to a US$1il-US$1.3bil-equivalent won financing.
South Korea has been starved of acquisition financings since the US$1.8bil leveraged buyout of Oriental Brewery Co Ltd in July.
Also gathering pace is the upcoming sale of a 68% stake in Daewoo International Corp, with steel giant Pohang Iron & Steel Co Ltd recently expressing interest in bidding for the listed trading company. — Reuters