Lone Star to restart KEB sale

The Dallas-based private equity firm is poised to bring its stake in Korea Exchange Bank back to the market. It failed in its previous two attempts to exit the investment.

Lone Star has placed its stake in Korea’s Korea Exchange Bank on the market for the third time, according to multiple reports.

The Dallas-based private equity firm, which bought a controlling stake in the bank in 2003, has failed in its previous two attempts to exit the investment.

Lone Star has appointed Credit Suisse as a lead manager to sell the stake – currently 51.02 percent – again, according to a report by Korea’s Yonhap news agency.

The Financial Times sited a statement by KEB: “Our board members were notified by Lone Star today that it would resume the M&A process, targeting domestic and foreign financial and strategic investors,” the bank said.

This follows an interview by the FT with Grayken last month in which he said Lone Star would sell its position in the bank in the next six months.

In 2006, a $7.3 billion deal with Korea’s Kookmin Bank fell apart due to domestic concerns over the profit Lone Star stood to make from that deal. In 2008, it failed again to sell its stake, this time to HSBC after Lone Star refused to lower its then $6.3 billion asking price. That price was deemed too high as it did not reflect the wider economic turmoil.

In addition to the problems incurred while trying to sell the bank, Lone Star was also embroiled in issues following its purchase of the bank in 2003.

Grayken himself was reported  to have been held by Korean officials for 10 days amid allegations of artificially depressing the stock price of the bank prior to buying its position, although this has since been questioned. In PERE’s Blueprint feature on John Grayken in June 2009, one source suggested Grayken “volunteered for questioning” which resulted in him residing in the country for more than a week.

KEB shares rose marginally by 1.5 percent on the news.