By Kim Yon-se
Staff Reporter

U.S.-based Prudential Financial on Tuesday signed an agreement with the government to take over Hyundai Investment & Securities (HIS) and CJ Investment & Securities.

The Financial Supervisory Commission (FSC) declined to disclose the sale price for HIS, but market sources said will likely be set at between 500 billion won and 700 billion won.

This will be the first time for an ailing domestic financial services company to be acquired by a foreign financial company, rather than a foreign fund investor.

Aside from the two fund investment trusts, the life insurance specialist has expressed its intention to acquire more local financial firms in the investment trust and insurance sectors.

``The possibility is always open,’’ Prudential International Investments chairman Stephen Pelletier said. ``We don’t rule out the possibility of additional takeovers of Korean financial companies.’’

But Pelletier said Prudential has no plans to make inroads into the domestic commercial banking or credit card sectors.

Prudential will take an 80 percent stake (worth around 300-400 billion won) in HIS and its subsidiary, Hyundai Investment Trust Management.

The remaining 20 percent (worth around 200-300 billion won) may be acquired by the group in three to six years, Prudential said. ``But the agreement does not involve Hyundai Securities.’’

At a news conference, Pelletier said the majority ownership in HIS expands Prudential’s global reach and gives it a tremendous opportunity to be a major player in the Korean marketplace.

The U.S. investor also hinted at a merger between Hyundai and CJ security firms after closing in January.

``Prudential is extremely pleased that our agreement with the Korean government is formalized and we are moving forward as planned,’’ he added.

Asked about the exact purchase price by reporters, he said the price would be set in closing. ``I won’t even comment on any prediction in the market.’’ He also declined to comment on the possibility of a reshuffle of managing and outside directors of HIS.

On the credit card firm crisis in South Korea, he said, ``The issue is how the Korean government will effectively absorb the cash flow problem.’’ He said the problem is common in other nations.

FSC official Kim Yong-hwan hinted the government will inject 2.4-2.5 trillion won in public funds into HIS for its management normalization in the near future.

Last March, Prudential Financial and the FSC announced through a memorandum of understanding that the firm would acquire a majority stake in HIS and its fund management subsidiary.

The U.S. investor has already invested $90 million in CJ Investment & Securities by acquiring preferred stocks and subordinate convertible bonds, and has an option to invest an additional $400 million by 2004.

Prudential holds an 8.46 percent stake in CJ Investment and is the third largest shareholder of the financial firm.

Prudential also has an insurance presence in South Korea through the Prudential Life Insurance, which entered the market 13 years ago.

kys@koreatimes.co.kr