San Francisco-based Newbridge Capital is nearing an exit of its portfolio company First Korean Bank, in a $3.3 billion sale to Standard Chartered Bank in London. Newbridge holds 49.5% of the shares of First Korean, one of Korea’s largest banks, after taking over the institution from the Korean government in 1999 when the bank had become insolvent during the Asian financial crisis.
Until recently it was assumed that U.K.-based HongKong Shanghai Banking Corp. (HSBC) would buy the bank from Newbridge. However, in mid-December, Standard Chartered made a significantly better offer to purchase the bank, turning the sale into a blockbuster success for Newbridge.
Newbridge had invested $492 million in First Korean in 1999.
This is the third major exit in Korea of a U.S.-based private equity firm from a Korean financial services or banking company. Ta-Lin Hsu’s H&Q Asia pacific sold Good Morning Securities to Shinhan Financial Group for a return of six times on its original investment in 2002.
In April 2004 The Carlyle Group and JPMorgan Partners sold Korea’s Koram Bank to Citigroup in a $2.4 billion dollar deal, for a multiple of more than five times their original investments.
Newbridge’s First Korean sale follows on the announcement in November 2004 that Newbridge would be the first non-Chinese company to gain control of a mainland China bank, the Shenzen Development Bank.