Hanwha Eyes Prudential Securities

After failing to acquire Daewoo Shipbuilding & Marine Engineering, the world's third-largest shipyard, Hanwha Group is now eyeing the financial segment where Prudential Securities has been up for sale since October.
Hanwha Securities has been touted ― together with KB Securities ― as one of the strongest contenders to take over Prudential. The former has a creditworthiness problem, though.
Hanwha Chairman Kim Seung-youn said in October that the financial sector would play a crucial role in the company's development down the road. Hanwha Securities officials also make no secret of their ambition.
``We think that this is a good opportunity to gain weight in the brokerage industry. Subsequently, we participated in the bidding for Prudential Securities,'' a Hanwha spokesman said.
Should Hanwha Securities purchase Prudential Securities, whose value is estimated in the neighborhood of 800 billion won, the second-string player will be able to rise to the top tier in terms of number of branches and in total capital.
Deutsche Securities Korea, which is taking charge of the sale, sent a memorandum to a myriad of potential buyers this October and a number of organizations both at home and abroad expressed their intention to take part in bidding.
Their official plan is to short-list five candidates, which would conduct due diligence early December to finalize the contract next year. A source said that the final five hopefuls have already been decided on.
``The final candidates are practically fixed, including Hanwha and KB as well as a pair of foreign entities. The market consensus is that the competition is basically a two-way fight between Hanwha and KB,'' said the source familiar with the issue.
``Hanwha will do its best but it remains to be seen whether KB will commit to a full-fledged effort. It might give up the Prudential auction if the holding company purchases a bank,'' he said.
KB Securities is an affiliate of KB Financial Group, the holding company of Korea's top lender Kookmin Bank. KB is often mentioned as a potential buyer when lenders such as Korea Exchange Bank or Woori Bank are on sale.
Deutsche Securities was not available for comment and Prudential Securities also refused to comment on the issue.
Some market watchers point out that Hanwha's major downside is its creditworthiness because the group gave up on a deal earlier this year, which it struck late 2008.
Late last year, the Hanwha Group agreed with the Korea Development Bank to buy Daewoo Shipbuilding at 6.3 trillion won. Hanwha is one of the country's 10 largest conglomerates, called chaebol.
But Hanwha decided not to buy the shipbuilder in the wake of the global financial crisis. The group is now in litigation with the KDB, the single largest shareholder of Daewoo Shipbuilding, over a more than 300 billion won deposit.