South Korea's No.4 banking group Hana Financial, whose two biggest shareholders are Singapore wealth fund Temasek and Goldman Sachs, said it may raise capital via a new share sale, fuelling talk of financial sector consolidation and knocking Hana's shares down almost 15 percent.
News of the rights offering comes as the government is gearing up to sell part of its 73 percent stake in Woori Finance Holdings, and U.S. private equity house Lone Star is reportedly ready to sell its stake in Korea Exchange Bank (KEB).
Our company is considering a rights offering as part of our capital plan, with a limit to preserve our shareholder value, Hana said in a filing on Monday, but it said no details had been decided on the possible share issue.
The Maeil Business Newspaper earlier reported that Hana was seeking to raise 1-2 trillion won ($853 million-$1.7 billion) in a rights offer. Yonhap news agency said the plan was aimed at financing acquisitions, citing an unnamed Hana official.
Hana shares, which have more than doubled so far this year, slumped 14.5 percent in a wider market down 2.3 percent.
The Maeil cited unnamed industry and regulatory sources as saying Hana recently requested proposals from securities companies to pick a lead manager for the planned share sale, and would finalise the issue this month after a board meeting.
Temasek is Hana's biggest single shareholder with a 9.6 percent stake, followed by Goldman with 8.7 percent. Both Goldman and Temasek declined to comment.
LITTLE TO GAIN?
The capital raising would follows rights offerings by bigger rivals Shinhan Financial Group and KB Financial Group earlier this year, as global regulators move to tighten banks' capital regulations.
The estimated size of Hana's capital raising represents 12-23 percent of its market value.
Analysts played down the likelihood of Hana taking a major role in the sector's consolidation.
Investors seem to think Hana has little to gain from the rights offering, said Lee Hyun-joo, analyst at Tong Yang Securities.
Even with the enlarged capital base, Hana is still considered too small to attempt buying Woori or KEB. I think Hana may seek a deal in the non-banking sector.
KEB, South Korea's sixth-largest lender, is seen as the most suitable target for a domestic bank. Acquiring Lone Star's 51 percent stake in KEB could require 5-6 trillion won, based on its market price.
Lone Star Chairman John Grayken was quoted as saying last week by Bloomberg that the fund planned to exit its KEB shares in 6-12 months.
KEB shares rose 5.4 percent to a 12-month high before closing flat on Monday.
(Additional reporting by Saeed Azhar in SINGAPORE; Editing by Jonathan Hopfner & Ian Geoghegan)