This article was published on Feb. 20, 2025, at 5:44 p.m. on the ChosunBiz MoneyMove site.
Hanwha Group signed a stock purchase agreement (SPA) to acquire management rights in OURHOME, while Woori Bank decided to take the lead as the sole underwriter for the acquisition financing. The total size is 250 billion won, and it is reported that the interest rate is likely to be set in the mid-to-upper 4% range.
Considering that recent acquisition financing interest rates are generally forming in the 5% range, the interest rate in the mid-to-upper 4% range is relatively low. This is attributed to the alignment of banks' positions to increase corporate credit, thereby raising the Basel III capital adequacy ratio, and Hanwha's goal of reducing interest expenses.
According to investment banking (IB) industry sources on the 20th, Woori Bank has decided to independently arrange financing for the 250 billion won OURHOME acquisition and is currently negotiating the specific terms. The interest rate is in the 4.6% to 4.7% range.
Earlier, Hanwha Group signed a contract to acquire management rights equity (58.62%) from former Vice Chairman Koo Bon-sung and Chairman Koo Mi-hyun on the 11th. The plan is to first acquire 50.6% and then buy the remaining 8% held by the eldest son, Koo Bon-sung, within two years. The total acquisition cost for the 50.6% is 750 billion won, with Hanwha Hotels and Resorts responsible for 250 billion won, financial investor IMM Credit and Solution (ICS) for 250 billion won, and acquisition financing covering the remaining 250 billion won.
An industry source stated, 'Even considering recent drops in interest rates, the 4% range is excessively low,' adding that 'it was originally a deal that was difficult to engage in unless one was a bank.'
The five major financial holding companies (KB, Shinhan, Hana, Woori, NH) have established a policy to strengthen risk-weighted asset (RWA) management and are exerting full efforts. An excessive increase in RWA raises the risk level compared to total assets and lowers the common equity tier 1 (CET1) ratio, as the CET1 ratio is the value obtained by dividing CET1 capital by RWA.
The CET1 ratio is an indicator of financial soundness for financial companies and is a crucial factor in determining the scale of dividends. If this ratio decreases, regulatory authorities may recommend adjustments to the dividend payout ratio, and banks may also reduce dividends considering financial soundness. In such cases, a rise in the stock prices of financial companies is typically limited.
Loans to large companies like Hanwha Group represent assets with relatively low risk weights. Hence, it is explained by industry officials that this helps maintain the Basel III capital adequacy ratio at a certain level.
Woori Bank is expected to formally sign the acquisition financing underwriting contract soon. However, Hanwha Group plans to secure part of the funding needed to acquire the remaining 8% of equity through acquisition financing, so banks are reportedly keeping an eye on 'the next opportunity.' The acquisition cost for the remaining equity is around 120 billion won.