Business Case Studies, Finance, Accounting and Control Case Study, Foreign Private Equity Funds,South Korean Banks

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Finance, Accounting and Control Case Study

Case Title:

Foreign Private Equity Funds in South Korean Banks

Publication Year : 2004

Authors: Firdaus & G Srikanth

Industry: Banking, Insurance and Financial Services

Region:South Korea

Case Code: FAC0003

Teaching Note: Not Available

Structured Assignment: Not Available

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The Korean banks were left debt-ridden with substantial non-performing loans in the aftermath of the Korean financial crisis of 1997-1998. These banks were nationalised and subsequently sold to foreign investors. Foreign private equity funds acquired some of the ailing Korean banks and injected the required capital and new management techniques. Their gamble has paid off, and the value of their investments has increased significantly. Now, when the foreign funds are cashing in on their investments, there is a growing fear in Korea that the foreign funds are focused on speculative gains and will have an adverse impact on the Korean financial industry in the long run.

Pedagogical Objectives:

    To discuss the role of foreign private equity funds in Korean banks and the perceived benefits and disadvantages these funds bring to the Korean financial industry.

Keywords :  Foreign private equity funds, South Korean banking industry, Korean financial crisis, Asian financial crisis, Chaebols, Korean conglomerates, Investment & Banking Case Study, Asian tiger economies, Highly leveraged companies, high debt-equity ratio, Restructuring Korean financial and corporate structure, International Monetary Fund, Pegged exchange rate, Fixed and floating exchange rate, Debt restructuring, South Korean won, Carlyle Group, Newbridge Capital, Lone Star, South Korea's gross domestic product

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