Daishin, Hanwha seen leading bid for S.Korea’s top real estate investor IGIS Asset

The sale of a controlling stake in South Korea’s top real estate asset management firm IGIS Asset Management Co. is picking up pace, with Daishin Securities Co. and Hanwha Life Insurance Co. emerging as frontrunners.

According to the investment banking industry on Wednesday, Morgan Stanley and Goldman Sachs, the seller’s lead advisors, invited bids for a preliminary auction for a 66% stake in IGIS Asset.

The total stake up for sale includes a 12.4% stake held by Son Hwa-ja, IGIS Asset’s top shareholder and late founder Kim Dai-young's wife, shares held by investors with tag-along rights and holdings of other financial investors, such as KB Securities Co. with 4.13% and Woori Bank with 0.8%, who are pursuing an exit.

The seller hopes to finalize the controlling stake sale by year-end, having invited around 20 domestic and overseas buyers earlier this year, sources said.

With IGIS Asset’s enterprise value estimated at about 800 billion won ($578.1 million) based on full equity, its buyer would need at least 480 billion won for the stake on offer. The price may climb, potentially with a premium for Korea’s No. 1 real estate investor.

But some view the valuation as inflated relative to operating profit, setting the stage for a likely price tug-of-war.

IGIS Asset reported a net profit of 73 billion won in 2024, representing a nearly 50% increase from the previous year.

DAISHIN SECURITIES VS HANWHA LIFE

Daishin Securities is currently floated as a strong contender.

The Korean securities firm with a 9.13% stake in IGIS Asset is one of the early FIs, and is the second largest shareholder after Son when combined with the 3.26% stake held by its subsidiary, Daishin F&I Co.

As Daishin Financial Group is seeking to expand its alternative real estate investment portfolio via Daishin Securities and Daishin Asset Management, the securities firm is expected to actively consider acquiring the controlling stake.   

Hanwha Life, seeking to grow its real estate holdings, is a strong bidder and has enlisted McKinsey & Company and Bank of America to advise on its IGIS Asset bid.

IGIS Asset could elevate Hanwha Life into a top financial player with major domestic and global real estate assets.

Beyond the two frontrunners, Korea’s top four financial holding firms – KB, Shinhan, Woori and Hana – as well as Korea Investment & Securities Co. are said to be eyeing the stake.

Foreign investors such as KKR & Co. are also being floated as potential buyers.

HURDLES REMAIN

But whether the new owner will gain full control remains uncertain, as some key stakeholders, including IGIS Asset’s Senior Managing Partner Cho Kab-Joo with 1.99%, GF Investment (GFI) with 9.90% and Daishin Financial Group, could opt out of the deal, potentially setting the stage for future disputes. GFI is regarded as Cho’s ally.

Some also caution that the sale could prompt a talent drain, a common risk in investment firm takeovers.

Since an investment firm’s success hinges on its people and track record, the IGIS stake should go to a buyer committed to retaining its key staff and safeguarding the brand, said industry observers.

Founded by the late Kim, a former deputy minister of Korea's Ministry of Land, Infrastructure and Transport, IGIS Asset operates 67 trillion won in assets under management (AUM).

One of the largest real estate firms in Asia, IGIS Asset has rapidly expanded its presence through acquisitions of prime offices, retail, logistics centers and residential housing. It manages more than a hundred properties in Asia and dozens in Europe and North America.

Since its founder passed away in 2018, his wife has been trying to offload her holdings without taking part in management. 

Write to Gyeong-Jin Min at min@hankyung.com

Sookyung Seo edited this article.