South Korea’s KEB Hana Bank likely to pay $787m for stake in Vietnam’s BIDV

Photo: KEB Hana Bank

South Korea’s second largest lender KEB Hana Bank, which is eyeing a 15 per cent stake in Vietnam’s state-controlled BIDV, will have to pay around $787 million for the acquisition.

BIDV, also known as the Bank for Investment and Development of Vietnam, will offload more than 603.3 million shares to KEB Hana Bank as a strategic shareholder, which will represent 15 per cent of BIDV’s new equity capital after the sale.

BIDV shares have been trading in the range of VND28,000-33,000 over the past month. The value of 603.3 million shares, at an average price of VND30,000 apiece, amounts to $787 million.

The transaction is expected to close in the first half of 2019.

The Vietnamese bank, whose market capitalisation is close to $4.7 billion, is Vietnam’s largest bank by total assets and second largest by market capitalisation, following Mizuho-backed Vietcombank.

The state owns 95.28 per cent equity interest in BIDV and, following the strategic sale, its interest will reduce to 80.99 per cent.

The Hanoi-based bank conducted its IPO in 2011 and was listed in 2014. It was said to have been looking for a strategic partner for the last two years. News emerged earlier this year that KEB Hana Bank was keen on the offer, about a year after BIDV implemented a key executive shuffle.

VietCapital Securities Company said in a report that the transaction, once completed, will help BIDV inch up to the Basel 2 standards.

The acquisition proposal comes at a time when a spate of South Korean banks are boosting their presence in Vietnam. Last year, Shinhan Bank acquired ANZ’s retail operations in the country to reinforce its leading position in Vietnam amongst Korean lenders. Other lenders including Woori, The Industrial Bank of Korea, KB Kookmin Bank and Nonghyup have also set up operation in the country.

KEB Hana Bank, which currently operates two branches in Vietnam, earlier this year showed its interest in the country’s fintech sector. The Korean lender’s parent firm, Hana Financial Group, recently agreed to sell 20 per cent stake in its Indonesia-based unit to Japanese messaging firm LINE Corporation to jointly expand fintech services in the most populous country in Southeast Asia.

Vietnam, as a densely populated market, has attracted huge interest in the financial services industry.

The Nikkei cited a report by the Financial Supervisory Service of Korea that the total assets of Korean banks in Vietnam advanced 18.9 per cent in 2017 to $5.7 billion in 2018, which is higher than the average growth rate of all overseas banks at 12.9 per cent.

As of September 2017, Korean banks had set up 428 foreign branches, of which Vietnam accounted for 48 units compared to 24 and 20 branches in Indonesia and Myanmar, respectively.

To date, a lot of international financial institutions have become strategic investors in major Vietnamese banks, such as Mizuho Bank (invested in Vietcombank), International Finance Corporation and MUFG (Vietinbank), Commonwealth Bank of Australia (VIB) and Sumitomo Mitsui (Eximbank). Other banks that have exited Vietnamese peers include OCBC, HSBC, BNP Paribas and Standard Chartered Bank.

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.