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Private equity consortium in bid to rescue troubled Korean telecom company

A private equity consortium led by AIG is preparing to rescue troubled Korean internet provider, Hanaro Telecom. The company's major shareholders, which include Samsung Group, LG Group and SK Telecom, are currently in discussions as to whether to accept AIG's $450m proposed investment offer or a rival funding offer by LG.

Hanaro, Korea's second largest internet provider was brought to the brink of bankruptcy after the company's feuding shareholders failed to agree on a bail out plan, according to the Financial Times. SKT supports AIG's proposed investment, but LG, which wants to take control of Hanaro through a $420m rights issue, strongly opposes the bid.

South Korea has the world's highest penetration of broadband users, with more than 10.6m high-speed internet subscribers in a country of 48m people. But despite the flourishing domestic market Hanaro has struggled to compete with rival KT Corp, which commands a 50 per cent market share.

AIG has sponsored 33 private equity funds to date and has committed capital of in excess of $10.6bn. A successful investment in Hanaro would form part of the firm's aggressive expansion into Asia, following a series of finance-sector deals in Japan and China.

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