Korean government plans another attempt at Woori sale

Kim Yongbeom, secretary-general of the Public Fund Oversight Committee (PFOC) - the group responsible for companies that have received government bailouts - said he expects a preferred bidder to be selected in October, Bloomberg reported. He added that meaningful changes in the financial environment convinced the committee that a sale could be executed.

Those changes include an amendment to payment rules for acquisitions that permit bidders to make cash-plus-stock offers in order to lower the amount they must commit to deals up front. Meanwhile, the benchmark Kospi index is up 8.2% this year and the financial index has gained 6.6%. Woori itself has advanced 27% this year.

Korea Deposit Insurance Corp. (KDIC) took control of Woori in 2001 as part of a government-mandated consolidation of the banking sector, which was still struggling in the aftermath of the Asian financial crisis. It was a temporary solution that has now been in place for more than 10 years, although several block sales of shares have allowed KDIC to reduce its holding to 57%.

The previous installment in the divestment efforts started in mid-2010, with an auction slated to take place later in the year. It was decided to sell off the company in tranches rather than to a single investor in order to maximize the value of the sale and the number of potential bidders. A total of 13 parties submitted proposals, according to sources familiar with the situation. They all wanted different pieces of the company but there was no credible bid for the principal asset - Woori Bank.

The auction was put on hold in December and revived six months later under a different format - interested parties had to bid for at least 30% of the company. MBK Partners, Tstone Corp. and Vogo Investment were expected to submit bids but only MBK ended up doing so. The PFOC pulled the auction on the grounds that there wasn't valid competition for the asset.

Once again, the committee has decreed that it won't sell off Woori piece by piece. It remains to be seen whether there are sufficient bidders able to absorb such a large transaction and whether the government would countenance selling to a PE firm if it isn't backed by a domestic strategic investor.

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• Topics
• North Asia
• Financials
• Buyouts
• South Korea
• Financial Services
• buyout
• MBK Partners
• Tstone
• Vogo Investment