Due to 'Kabang' Stock Plunge... Hong Kong PE Recovers 340 Billion KRW in Advance Using Equity as Collateral

[Image source=Yonhap News]

[Asia Economy Reporter Lim Jeong-su] Anchor Equity Partners (Anchor PE), a Hong Kong-based private equity firm, has raised 340 billion KRW by pledging its stake in KakaoBank held through its fund. As KakaoBank's stock price plummeted to its initial public offering (IPO) starting price level, various interpretations have emerged regarding Anchor PE's recent stock-backed loan.

According to the investment banking (IB) industry on the 9th, IPB Ltd. secured a stock-backed loan worth 340 billion KRW underwritten by Korea Investment & Securities. The pledged shares are 2.24% of KakaoBank's common stock. Based on the closing price on the 8th, KakaoBank's market capitalization stood at 26.4155 trillion KRW, valuing the pledged stake at approximately 634 billion KRW.

The underwriter, Korea Investment & Securities, raised the loan syndicate by dividing it into a senior tranche of 310 billion KRW and a subordinated tranche of 30 billion KRW according to repayment and collateral priority. The loan maturity is three years with a lump-sum principal repayment at maturity. However, even before maturity, if the collateral shares are sold or dividends received, the borrowed amount must be repaid preferentially by the corresponding amount.

IPB Ltd. is a corporation established in Malta, a Mediterranean island nation, by Anchor PE for pre-IPO equity investment in KakaoBank. Malta is known as a major European tax haven alongside Luxembourg and the Netherlands. At that time, IPB Ltd. invested a total of 250 billion KRW at 23,500 KRW per share.

Some in the capital markets view this stock-backed loan as a proactive move to recover funds amid the sharp decline in KakaoBank's stock price. It is interpreted as pressure from some limited partners who invested in the KakaoBank fund to retrieve their capital.

KakaoBank's stock price rose to the 90,000 KRW range after its August listing but fell to 52,000 KRW, below the IPO starting price, due to factors such as the release of lock-up shares by some institutional investors. Despite the price drop, the value of the stake held by Anchor PE is estimated to be more than twice the invested amount.

An IB industry insider said, "Anchor PE has already secured a confirmed return of 36% within one year of investment through the stock-backed loan," adding, "They are expected to achieve even higher returns during the future equity exit process." The insider also noted, "However, this move is being interpreted as a signal of pressure to sell shares ahead of upcoming lock-up expirations, which is weighing on the stock price."

A representative from Korea Investment & Securities explained, "This loan was reviewed and processed since September regardless of the stock price, and the long-term loan structure reflects the intention to hold KakaoBank shares for the mid to long term," adding, "If they intended to sell the shares, they would have raised funds through a short-term bridge loan."

Meanwhile, the lock-up on the shares held by Anchor PE will be lifted in February next year, six months after the listing.

This content was produced with the assistance of AI translation services.