Woori Financial to acquire VC firm Daol Investment

South Korea’s Woori Financial Group is set to acquire Daol Investment Co., a venture capital arm of the liquidity-strapped Daol Financial Group, for an estimated 210 billion won ($170 million).

Daol Investment on Tuesday signed a memorandum of understanding with Woori to sell the entire 52% stake held by Daol Investment & Securities Co. The deal will be finalized by March, according to Daol's regulatory filing.

The transaction value has not yet been disclosed. But people familiar with the matter estimated it at 210 billion won.

It represents about a 10% premium from Tuesday's market value. The VC house, formerly KTB Network Co., was listed on the junior Kosdaq market at the end of 2021.

The stake sale is expected to ease the liquidity crunch of Daol Investment & Securities.

The brokerage firm has taken a severe battering from a string of debt defaults in project finance deals, a key source of profits, on the back of subdued stock markets.

Earlier this month, it had areed to sell a 100% stake in Daol Credit Service Co. for 13 billion won to South Korea’s Mason Capital Corp. and another company.

Now its parent group has put Daol Thailand PLC. for sale as well.

Daol Investment is South Korea’s first-generation VC firm. Founded in 1981, it has invested more than 2 trillion won in about 1,200 startups at home and abroad. One-fourth of them, or some 300 companies, have gone public.

Its lucrative investments include Woowa Brothers, operator of South Korea’s top food delivery platform Baedal Minjok and Viva Republica Inc., which runs internet-only bank Toss.

Daol Investment manages 1.5 trillion won in assets with 286 billion won in capital as of end-September, 2022.

Hit by declining valuations and soured investor sentiment, however, it swung to an operating loss of 1.1 billion won in the third quarter of last year against revenue of 3.8 billion won.

Following the VC house purchase deal, market speculation is that Woori Financial, led by Chairman and CEO Son Tae-seung, might bid for Daol’s brokerage arm to further beef up its non-banking portfolio.

Woori, the country’s No. 4 financial services group by market value, is the only financial services firm among major players in the country without a brokerage service unit.

Back in 2014, it sold then Woori Investment & Securities Co. to NongHyup Financial Group.

Write to Chae-Yeon Kim and Ui-Myung Park at Why29@hankyung.com
Yeonhee Kim edited this article