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Choeun Acquisition

Objective

After building out the dominant secondary loan and fixed income trading platform across the Asia-Pacific region, SC Lowy began looking to enter local financing markets, seeking to capitalise on opportunities that result from an on-shore presence. The group detected a rare opportunity when the sale of Shinmin Mutual Savings Bank became public.

Background

SC Lowy had just completed a landmark advisory Debtor-In-Possession financing that allowed Korea Line, a major local shipping company, to rebuild its business and exit bankruptcy. The transaction provided considerable benefit to employees, shareholders and creditors, and gave SC Lowy the reputation as a trusted partner in Korean finance.

Shinmin Mutual Bank was founded in 1972.  Its business included accepting deposits and making commercial loans, but in the aftermath of the Korea’s savings bank crisis, Shinmin was struggling to survive. 

Transaction

After a rigorous check by regulators, SC Lowy and private equity firm Yuli PE won approval to acquire 89% of Shinmin from Samhwan Corporation, a listed Korean construction company.  SC Lowy is one of the very few foreign businesses awarded a banking licence in Korea. 

The new owners renamed the bank Choeun, the Korean word for “good”. Ho-Jun Lee was appointed CEO and Soo Cheon Lee managing director of the bank. Ho-Jun Lee, formerly CEO of Yuli PE, worked in the investment banking division of the KDB Capital before he became CEO of S&T Mutual Savings Bank. Soo Cheon Lee is chief investment officer and founding partner of SC Lowy.

Choeun completed a KRW 16.5 billion rights issue in January 2014, which increased the total value of its equity capital to KRW 18.9 billion and took its Tier 1 capital ratio to 20%.

Outcome

The initial focus of Choeun’s new management has been to reduce the bank’s loss-making mortgage finance business, strengthen risk-management processes and introduce global governance standards.  The new strategy is to provide loans to small-to-medium-sized enterprises.  

The bank has significant upside potential, providing SC Lowy with long-term access to the Korean domestic debt market as well as providing a local servicing platform for SC Lowy’s Korean assets. 

Learn more about Choeun Savings Bank