Pawning Off
The Korean government has launched a fifth attempt to sell a 48.07 percent stake in Woori Bank in two tranches, selling first a 30 to 40 percent stake to an investor who could take a significant role in the management of the company, and then the remaining stake to multiple investors in lots ranging from 4 to 10 percent each. However, it will decide the date to sell the stakes, as the amount of investors showing intention to buy the stakes didn’t reach target numbers.
“We took a survey for the past three months to see if there was a bidder who had an intention to buy a controlling stake in the bank. There wasn't,” said Park Sang-yong, chairman of the Public Funds Oversight Committee (PFOC) at the Financial Services Commission (FSC). He added, “So, we made contacts with potential individual and corporate investors who have an interest in a minority stake.” Interested investors are known to include domestic pension funds, home-grown private equity funds, Korean companies, and some individuals that Park didn’t elaborate on.
The government hopes to sell a 48.07 percent stake in Woori Bank out of the 51.04 percent held by the state-owned Korea Deposit Insurance Corporation (KDIC). The KDIC needs to keep the remaining 2.97 percent until Dec. 8, 2017 as Woori Bank employees, who bought a 5.94 percent share of treasury stocks on Dec. 8, 2014, were given the right to exercise a call option for half of the stocks for the following three years.
The PFOC will split the 48.07 percent stake into two tranches, pushing ahead to sell a 30 to 40 percent stake in the bank as the first step and holding the remaining 8.07 to 18.07 percent stake to dispose of later within the buying range of 4 to 10 percent for each investor according to future market situations.
Asked about the possibility that the sale in lots may allow hedge funds like Lone Star or Elliott Management an opportunity to control the bank's management, the PFOC chairman said that is “his concern.”
So far, four attempts to privatize the bank since 2010 have all failed. Public funds of more than US$12 billion were injected into the bank a decade ago.
In the meantime, the bank’s net profit fell 20 percent to 299.95 billion won (US$260.23 million) in the first quarter this year from 373.96 billion won (US$324.42 million) a year ago.