(Adds private equity, other details)
By Michael Flaherty
HONG KONG, Sept 19 (Reuters) - Kookmin Bank 060000.KS has hired Merrill Lynch, replacing Goldman Sachs, as lead adviser to the South Korean lender's estimated $4 billion stake sale, a deal that has attracted interest from private equity funds, sources said.
Goldman (GS.N) lost the advisory mandate a week after its research analyst issued a sell rating on Kookmin shares on Aug. 30, a source familiar with the matter said on Friday. Kookmin shares have fallen 13 percent from the date the note was issued through Thursday.
Kookmin, the country's top retail lender, plans to convert into a holding company structure on Sept. 29, a move that will prompt two auctions for stakes in the group. Afterwards, Kookmin will engage in a complex process of selling stakes over the next few years.
Kookmin, Goldman and Merrill declined to comment on the mandate. A Kookmin official confirmed the Aug. 30 research note, but declined to give any other details.
Kookmin Bank will have to sell a 5 percent stake within six months, according to a source familiar with the matter. Kookmin's holding group, the integrated company, will have a 12 percent stake up for grabs, the source said.
The holding company is expected to be publicly listed on Oct. 10, the source said.
Kookmin, with a market value of $16 billion, has to sell the shares it owns in itself within the next three years under domestic law.
Hwang Young-key, who leads the holding group, said last week Kookmin was in talks with foreign institutions to sell the shares it owns.
South Korea's merger and acquisition market has heated up recently. Year to date, Goldman and Merrill are ranked four and five respectively in the country's M&A league table, according to Thomson Reuters data.
Merrill has five announced deals so far this year worth $7.5 billion, Goldman has three, worth $7.7 billion, according to Dealogic.
Goldman was also dropped as the preferred adviser for the Daewoo Shipbuilding (042660.KS) auction earlier this year, a deal that could fetch up to $8 billion.
On Friday, Kookmin's stock was up 6.3 percent amid a rally in the broader market and after HSBC (HSBA.L) (0005.HK) withdrew its $6.3 billion offer for Korea Exchange Bank 004949.KS. Kookmin said it was watching the KEB situation with interest.
Citing industry sources, the Korea Economic Daily reported this month that the Government of Singapore Investment Corp (GIC) and Japan's Sumitomo Mitsui (8316.T) were in talks to each acquire a 3-4 percent stake in Kookmin's holding company.
The prospective sale would be part of Kookmin's efforts to improve its capital base and boost foreign currency liquidity, Jun Kwang-woo, chairman of South Korea's Financial Services Commission, has said. (Additional reporting by Kim Yeon-hee in Seoul; Editing by Jonathan Hopfner and Anshuman Daga)