The auction to sell a controlling 10.04 percent stake in SK Securities Co., the brokerage unit under South Korea’s major conglomerate SK Group, has drawn multiple bidders including Cape Investment & Securities Co., hinting at the success of the sale that should be completed by early August to comply with the country’s fair trade regulation that bans a holding company’s stake ownership in a financial unit.

According to sources from the investment bank industry on Monday, SK Group and its financial advisor Samjong KPMG have received preliminary bids from a number of securities firms, including Cape Investment & Securities, and private equity funds (PEFs) before the deadline on Monday. They are expected to shortlist two to three contenders before selecting a preferred bidder after receiving final bids.

Industry sources expect SK Group would seek a buyer who is willing and capable to develop the brand value of SK Securities and ensure stable job security after the sell-off. A strong candidate should also prove its financial ability to fund the buyout and pass major shareholder eligibility evaluation conducted by the country’s financial authority, a must that could help the company complete the sale without setback before the August 2 deadline set by the Fair Trade Commission.

Under Korea’s fair trade law, a holding company is not allowed to own stakes in financial companies. To abide by the law, SK Group earlier this month announced its plan to sell off a 10.04 percent stake in SK Securities held by SK C&C, the group’s information technology (IT) service unit that was merged with the group’s holding company SK Holdings Co. in 2015. The remaining 83.88 percent stake is held by minority shareholders.

Market analysts estimate that the deal value would be set below 100 billion won ($88.1 million) including management premium based on the company’s total market capitalization of about 600 billion won, or 1,880 won a share, as of Monday. However, considering that a potential buyer would want to exert tighter control over management, the candidate may propose a rights offering to hike its stake ownership, which could raise the total buyout value to as high as 200 billion won.

By Kang Doo-soon and Chun Gyung-woon

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