Securities firms find opportunities in tender offer market

• Published date: 10 March 2023
• Publication title: The Korea Times

With a series of tender offers grabbing recent headlines, local securities firms' investment banking departments seem to be perking up, after months of recessional declines due to plunged asset prices.

A tender offer is a type of public takeover bid to purchase some or all of shareholders' stocks in a corporation, inviting shareholders to sell their shares at a specified price within a particular window of time.

This year alone, the so-called big four brokerages in Korea ? Mirae Asset Securities, Korea Investment, NH Investment and Samsung Securities ? have already conducted a total of four tender offers so far. This is similar to the number of their tender offers throughout all of last year.

In particular, three out of the four tender offer cases were initially brought up amid management rights disputes, triggered by activist funds' shareholder proposals. For instance, the Korea Corporate Governance Improvement (KCGI), a local activist fund, was behind a tender offer on Osstem Implant shares in February. After acquiring about 7 percent of the dental company last year, the KCGI started to press Osstem Implant management to improve its corporate governance. Under such pressure, the private equity consortium of MBK Partners and Unison Capital Korea (UCK) launched the tender offer, selecting NH Investment and Securities to take charge of the public takeover process.

In addition to earning advisory service fees for the takeover process, NH Investment also garnered loan interest profits by offering a bridge loan ? a short-term loan used until a corporation secures financing ? worth 1.7 trillion won ($1.28 billion) to...