MBK Partners Fails To Put Together KEB Buyout Group

(Reuters) – MBK Partners, the buyout fund that focuses on north-east Asia, has failed to put together a group to bid for a $5 billion controlling stake in Korea Exchange Bank (004940.KS), people familiar with MBK’s plans said.

MBK had approached Nomura Holdings (8604.T), sovereign wealth funds and South Korean government pension funds to partner with it to buy 51 percent of KEB, according to the people.

But MBK’s potential partners were aware South Korean officials are extremely reluctant to allow KEB to be bought by a buyout-led group of investors, sources said.

MBK declined to comment.

South Korean views of private equity have been soured largely because of KEB’s owner Lone Star Group [LS.UL]. In 2006, Lone Star’s Chairman John Grayken accused South Korean officials of being “anti-foreign” after the Dallas-based firm became the subject of an investigation regarding its purchase of KEB in 2003.

“It’s a shame but KEB’s sale has been affected more by politics than by business,” said a senior South Korean banker, who like other sources declined to be identified because he was not authorised to speak on the record about the matter.

The sale of KEB is now likely to be pushed back until 2011, the sources said. ($1=1166.0 Won) (Reporting by Brett Cole; Editing by Lincoln Feast)