April 19, 2024

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South Korea’s top financial regulator said on June 25 that Woori Financial Group’s state-owned shareholder will sell its entire stake of by no later than 2022.

The Financial Services Commission has approved an exit strategy of the Korea Deposit Insurance Corp. to sell off its 18.3 percent stake in Woori Financial. 

Woori Financial Group Chairman Sohn Tae-seung

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According to the plan, the stake sell-off will take place over two-three rounds over the course of three years until 2022. In each round, up to a 10 percent stake will be put up for sale for strategic investors. Failure to do so will lead to a block sale of the corresponding amount, plus the remaining stake.

The first round of bidding will take place in the first half of 2020. The new investor might be given a chance to recommend a candidate as an outside director on Woori Financial’s board, according to the tentative plan.

“These changes are part of KDIC’s efforts to remove uncertainties and pour back money into the state coffers,” Lee Se-hoon, a high-ranking FSC official said in a press briefing.

KDIC has been the largest stakeholder of Woori Financial for over two decades, while looking to hand its stake over to private investors. Following the 1997 Asian financial crisis which plagued the banking institutions including Woori Bank, the KDIC injected 12.8 trillion won ($11.1 billion) to acquire its entire stake and bail out the troubled lender.

KDIC has so far recouped 11.1 trillion won from stake sale proceeds, sale of subsidiaries and dividends, which accounts for 87.3 percent of its initial investment.

The state-run corporation’s move to privatize Woori Financial materialized in 2016. Then a majority stakeholder, KDIC finished handing over nearly 30 percent stake in January 2017 to a bundle of investors: IMM Private Equtiy, Mirae Asset Global Investments, Kiwoom Securities, Korea Investment & Securities, Hanwha Life Insurance, Tong Yang Life Insurance and Eugene Asset Management.

By Son Ji-hyoung (consnow@heraldcorp.com)