Nomura, MBK Consider Joint KEB Stake Bid

HONG KONG (Reuters) – Nomura Holdings (8604.T) is in talks to join private equity firm MBK Partners in its pursuit of the $3.5 billion Korea Exchange Bank (004940.KS) stake up for sale, sources with direct knowledge of the matter told Reuters on Monday.

Sources said the discussions were in their early stages and no decision had been made. Joining forces with MBK was only one of several options being considered by Nomura, a source said.

Nomura declined to comment. MBK was not immediately available for comment.

Should Nomura pursue a joint bid, however, it would be a bold move by Japan’s top brokerage and a major development in the KEB auction process that has otherwise gotten off to a slow start.

The sources declined to be identified as the discussions were confidential.

U.S. private equity firm Lone Star [LS.UL] is, for a third time, auctioning its 51 percent stake in KEB. The auction has yet to produce a public offer, but some parties, including Australia and New Zealand Banking Group (ANZ.AX), have expressed interest.

The sale of foreign exchange-focused KEB had been expected to fetch more than $4 billion but has showed slow progress so far, with major local banks remaining inactive.

Like any auction, bidders can come and go any minute, with nothing final until a deal is agreed upon and closes.

Sources have previously said that MBK, with experience investing in South Korea, is interested in bidding for the stake. The firm was expected to seek the help of a corporate buyer, as the stake up for grabs is almost as large MBK’s total assets under management.

While Nomura, with a near $22 billion market value, could act as a lender for such a transaction, sources said on Monday the Japanese brokerage may end up being a co-investor.

That Nomura would pursue such a transaction so quickly after its difficult acquisition of Lehman Brothers seems surprising.

Then again, Nomura has made it clear that it intends to become a true global bank, and this may be an opportunity it sees as helping to achieve that target.

Though the KEB sale process has been fraught with regulatory and legal issues, its asking price is far cheaper than what was on offer the last time around.

Local South Korean banking groups including KB Financial Group (105560.KS) are waiting for the government to outline privatisation plans for Woori Finance Holdings (053000.KS) in late June before they chase KEB, banking sources said.

Credit Suisse (CSGN.VX), which is is advising Lone Star, declined to comment.

By Denny Thomas
(Editing by Chris Lewis; Editing by Hans Peters)