As many as 16 financial institutions and private equity funds from home and abroad have entered the preliminary bid for Woori Bank, whose government stake of 30 percent has been offered in splinters of 4 percent to 8 percent after four previous lump-sum privatization attempts all failed.
State-run Korea Deposit Insurance Corporation (KDIC) as of Sept. 23 received letters of intent from potential bidders for its 30 percent stake in the country’s fourth largest bank ahead of the formal auction in November. The 18 bidders included Korea Investment Holdings Co., Hanwha Life Insurance Co., Korea Investment and Securities Co. and China’s Anbang Insurance Group.
Orix of Japan was said to have joined the Chinese insurance firm as one of the foreign firms applying to bid for the stakes in the Korean bank.
The fresh auction is drawing interest because the smaller stakes reduce the risk and investment burden. The winning bidder could also eye the next sale of the remaining government stake of 18.09 percent to become a majority shareholder of a major bank in Korea. The rest is expected to be out on the block in the second half of next year.
According to the financial authority and investment banking industry on Sept. 21, among the 18 bidders which handed in letters of intent (LoI), JPMorgan Chase & Co., Samsung Securities Co. and Mirae Asset Daewoo Co. are being filtered out.
The candidates have been individually informed and invited to conduct due diligence to prepare for their formal bid. The organizers declined to name any of them, but according to sources, Hanwha Life Insurance Co., Korea Investment Holdings Co., Tongyang Life Insurance Co., and Kiwoom Securities Co., along with a number of financial investors Affinity Equity Partners, H&Q Asia Pacific Korea, Hahn & Co., and Vogo Fund, have made the final cut.
If Korea Investment Holdings wins the bid, it could become a competitive financial group with a major bank under its arm. The company’s chief executive, Kim Nam-Goo, is considered among the most reliable and competent financiers in Korea. Korea Investment Holdings is said to have applied that it was interested in taking up the entire 8 percent.
Domestic funds, Hahn & Company, H&Q Asia Pacific Korea and IMM Private Equity, and foreign private equity fund firms such as Affinity Equity Partners, CVC Capital Partners and Orix Private Equity, have also handed in their LOIs.
Woori Bank shares ended Sept. 23 at 11,350 won ($10.29), up 1.3 percent from the previous trading session.
What has been drawing a special attention among the bidders is that most are private equity funds and financial investors, not strategic investors, which would have signaled some tough times ahead in the process of naming the winning bidder.
Korea Deposit Insurance Corp. doesn’t plan to put up its entire stake in the bank, which is about 30 percent, instead selling it off bit by bit, with the maximum stake that a bidder can bid for this time being 8 percent, with 4 percent set as the minimum stake up for grabs.
Korea Investment and Securities is said to be bidding for the 8 percent stake, the maximum allowed, and KIS would need some 613.8 billion won if it wins the bid, according to Sept. 23’s closing price. They estimate the share price should be around 12,000 won per share to 13,000 won per share on the bidding day in November if the bank’s shares continue follow current trading patterns. Hanwha Life Insurance is likely to bid for a 4 percent stake.
A view of the Woori Bank building in downtown Seoul.(Photos: Woori Bank)
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