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Banking & Finance

Woori Fin to move closer to privatization by year's end

State-run KDIC plans to sell 10% stake in Woori Fin shares to cut its holdings to 5%

By Sep 10, 2021 (Gmt+09:00)

Woori Fin to move closer to privatization by year's end 

The South Korean government will sell another big chunk of its remaining shares in Woori Financial Group by year's end to finally give up its top shareholder position held in the banking group over the past two decades.

The Korea Deposit Insurance Corporation (KDIC) will offload up to a 10% stake in Woori in a competitive tender, rather than a block sale, the state-run agency said on Thursday. The stake up for grabs is worth 800 billion won ($680 million) at current market prices.

"After tapping the market, our sale manager was informed of potential buyers of Woori shares, and we decided to go with a competitive tender," said an official of the regulatory Financial Services Commission (FSC), which oversees the KDIC.  

Competitive bidding is more likely to draw long-term investors and fetch a higher price than a block sale. The KDIC has reduced its stake in Woori through block deals, including the sale of a 2% stake for 149.2 billion won in April of this year. Its previous attempts in the 2010s to sell the banking group as a whole had failed.

It will receive letters of intent by Oct. 8 from bidders, which are required to propose the number of shares they want to buy and the purchase price. 

Considering that a buyer could become a major shareholder in Woori, the government agency will also take into account non-price factors, which it has yet to specify. It will complete the auction in November.

If the sale goes through, KDIC will be left with a minimum 5.13% stake in the financial services group and deprived of the right to appoint non-executive directors for Woori Financial Group and its unlisted unit Woori Bank.

The other major shareholders in Woori are the National Pension Service with a 9.8% stake and Seoul-based IMM Private Equity with a 5.62% stake as of the end of June. Both shareholders will also be invited to the auction, the KDIC added.

To fan interest in Woori shares, a buyer of more than a 4% stake will be granted the right to recommend a non-executive director of Woori Financial. If it fails to draw enough demand in a competitive tender, the remaining shares on offer will be sold through a block trade, according to the state-run agency.

Woori was created through a combination of five troubled financial services companies in the wake of the 1997-98 Asian financial crisis.

In June 2019, KDIC announced a plan to dispose of its then remaining 17.25% stake in Woori in two to three batches by 2022. It had injected 12.8 trillion won in taxpayers' money into the entity at an average price of 12,000 won per share.

Shares in Woori edged up 1.39% to 10,950 won in Friday afternoon trade. With a market capitalization of 8 trillion won, the stock has been stuck in a range between 90,000 and 11,000 so far this year, compared to a 9% rise in the broader Kospi market.

Write to So-ram Jung at ram@hankyung.com

Yeonhee Kim edited this article.

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