The South Korean government plans to fully cash out of Woori Financial Group by selling its remaining 18.3 percent stake in it by 2022. It will not sell the shares all at once, but offload them in sequence over three years starting from 2020. The schedule for a complete privatization of Woori Financial has removed uncertainty about its future.
The Public Fund Oversight Committee (PFOC) under the Financial Services Commission (FSC) finalized its plan to sell off the remaining stake in Woori Financial on June 25. It will divest the stake in two to three stages starting from 2020, offloading up to 10 percent each time by 2022. The PFOC will sell the stake through public tenders where bidders who place a bid above the predetermined price can buy the amount of stake they are willing to buy at the bid price.
The government used this sale method when it sold its stake to the oligopolistic stockholders in 2016. Those who can join the bidding are existing oligopolistic stockholders and new investors who satisfy a minimum bidding quantity of 4 percent. The PFOC will use block sales if the stake is not sold out. Up to 5 percent of any remaining shares will be sold via a block deal in each tranche.
The PFOC has postponed the time of the remaining stake sale until next year to avoid the issue of overhanging. Woori Financial's board decided to make Woori Card its subsidiary and pay half of the proceeds from sale to Woori Bank through cash and the rest through a 6.2 percent stock swap on June 21. Under the current financial holding company law, a subsidiary (Woori Bank) is required to sell shares within six months after it acquires the shares of a holding company (Woori Financial). Given the current situation that Woori Financial needs to manage the shares in the second half of this year, the price of shares will go down if the expected shares come into the market, according to authorities. The government will be able to maximize the divestment of public funds by selling the shares when stock prices go up.
Woori Financial will be fully privatized in 24 years by 2022when the government completely sells off its stake. South Korea injected public funds into the financial group to close down and manage five insolvent financial firms, including Hanbit Bank, right after the International Monetary Fund (IMF) crisis in the late 1990s.