Texas-based private equity group Lone Star Funds has complained that criticism leveled at the investment it has made in Korea Exchange Bank is driven by an "anti-foreign investor political climate" in South Korea.
Lone Star has agreed to sell the 51% stake in the Korean lender it bought three years ago to Kookmin Bank, but the deal is being held up as regulators investigate the firm. Lone Star is expecting to make a profit of more than $4 billion on the deal.
The profit Lone Star has earned is in part due to the rescue effort and turnaround plan but also is a reflection of the general recovery of the Korean banking sector, founding and managing partner John Grayken told reporters at a New York press conference. The hostile anti-foreign investor political climate has created great uncertainty for us as investors in Korea.
The bank was on the verge of collapse when Lone Star stepped in with its $1.2 billion investment. Korean authorities are investigating the purchase over allegations that the firm manipulated data to make the state of the bank appear worse than it was, and that it lent on government officials for approval.