Newbridge: Turning Troubled Firms to Stable and Operational Levels

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Newbridge had a long experience and expertise in turning around troubled firms and bringing them to a stable and operational level by transferring knowledge, capital and experience to the firm. They had first hand experience in turning around failed American savings bank in 1988, they saw that they could apply the knowledge gained from it in transforming KFB. As Newbridge’s operations had expanded into far-east region, their portfolio included diverse industries, which helped them gain experience and understanding of how the industries and financial systems functioned. So considering Newbridge’s prior experience and proven track record of investing in industries like Steel, Consumer Goods and Food & Beverage helped it in valuation of Korean companies that KFB had been doing business with. There by giving a firm grasp on the risk exposure when bidding for KFB.

Korea had a strong industrial foundation and the economy was growing at a fast pace. The only down side was the financial infrastructure was managed improperly. Newbridge, being an US company had strong financial infrastructure and sound policies, saw an opportunity to capitalize b implementing similar controls and credit policies. KFB had long history, good reputation and nationwide local branches; it was among the top 5 largest banks in Korea and their loan portfolio included industries such as Iron and Steel, Construction and Motor Vehicles. These industries contribute to form the building blocks for economic growth. As Newbridge already had substantial expertise and experience in managing these industries, they were in a better position to evaluate KFB’s portfolio. Factors that contribute towards Newbridge’s ROI :

Newbridge followed a model of Good Bank/Bad Bank which was used in revive American Savings bank. Using that same model, they had negotiated that Newbridge will not own any future non-performing loans from companies that already existed in KFB’s loan holdings and that the government...
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