Private Equity Korea » Woori Finance

Woori sale set to fall through due to lack of bids

Stephanie Lim — Thu, 18 Aug 2011 01:05:16 +0000

Various news sources have reported that by the August 17 deadline, only one bid had been submitted for the purchase of the government-owned Woori Financial Holdings. The bidder, MBK Partners, submitted an undisclosed amount for a 30 percent stake.

According to Reuters, the financial regulators in charge of the privatization stated on August 17 that the decision to continue or abandon the sale will be made on Friday, August 19. Financial experts suspect the deal will fall through, making this the second failed attempt to find a private owner for the country’s biggest banking group by assets, with last year’s attempt also failing to draw sufficient interest.

Though government officials, spurred on by President Lee Myung Bak, have been aiming to privatize companies that were bailed out more than a decade ago, the second attempted Woori sale received only one bidder due to the recent steep declines in world markets and public criticism of the role of private equity funds.

According to the Wall Street Journal, the two other private equity firms that had been expected to bid, Vogo Fund and TStone Corp., said separately that they didn’t do so because of deteriorating capital-market conditions.

Politicians have also said that selling to a consortium led by a private-equity fund won’t help develop the local financial industry. Critics say Woori Finance would just be put up for sale again in a few years as the goal of a private-equity fund is to make a profit.

Private equity firms have also been reluctant to participate in the sale, for fear of hold-up situations like those of Texas-based Lone Star Funds. Lone Star has been trying to sell Korea Exchange Bank for years, but has been dogged by lawsuits and by public hostility toward foreign private equity funds that bought Korean assets cheaply in the wake of the 1998 financial crisis.

Thus, the sale is likely to be scrapped once again, as regulators want to see offers from more than two bidders to show South Korean voters that the government had sought to get value for taxpayer money.

Woori shares recently rebounded from an almost a two-year low as world stock markets slumped, and on August 17 its shares rose 1.3 percent to 12,100 won ($11.30)outperforming a 0.68 percent rally on the wider KOSPI index.

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Goldman and CPP join MBK for Woori bid

Stephanie Lim — Wed, 17 Aug 2011 04:14:19 +0000

According to Reuters, MBK Partners has completed fundraising for their Woori Financial bid. Goldman Sachs and Canada Pension Plan Investment Board have joined Korean Federation of Community Credit Cooperatives and Busan Bank in MBK’s consortium, and MBK will submit a bid by the August 17 deadline.

The other two local funds, TStone and Vogo, are still on the fence about making a bid. TStone’s decision will likely be known after the official bids are in, and Vogo is still considering its participation as it has not succeeded in finding a strategic investor to finance their bid.

According to local news reports, TStone has secured investments from US banking and finance buyout firm J.C. Flowers and is in talks with Daegu Bank. TStone’s consortium is looking for 50 percent of its financing from Korea, and the other half from overseas.

However, despite these substantial financing efforts, the entire 56.97 percent stake sale is in jeopardy, as the government is reconsidering the sale since the stock value of Woori Finance has fallen to such low levels.

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M&A between Woori and KB grows imminent

Stephanie Lim — Thu, 21 Apr 2011 04:52:08 +0000

The Korean government plans to publish a schedule for the privatization of Woori Finance next month. Since Hana Group acquired KEB, an M&A between Woori and KB Finance seems to be practical solution.

Experts say that KB Finance has long prepared for the Woori deal and they will likely be able to afford the deal, since it was managed conservatively and expects profits of more than 2 trillion won this year. Their hope is that the deal will synergize consumer and corporate banking.

The Korean government lists three principles for its privatization efforts: maximal recovery of public money, development of the financial industry, and quick and efficient privatization.

Source: translated from Money Today

M&A between Woori and KB grows imminent

Stephanie Lim — Thu, 21 Apr 2011 04:52:08 +0000

The Korean government plans to publish a schedule for the privatization of Woori Finance next month. Since Hana Group acquired KEB, an M&A between Woori and KB Finance seems to be practical solution.

The Korean government lists three principles for its privatization efforts: maximal recovery of public money, development of the financial industry, and quick and efficient privatization.

Source: translated from Money Today

Woori looks to buy more savings banks, wants to move towards Micro-lending

Stephanie Lim — Tue, 29 Mar 2011 02:01:40 +0000

Local news media JoongAng reports that Daily Woori Financial Group stated on March 28 that it plans to acquire one to two more savings banks in order to diversify its business into microcredit finance.

Woori FG Savings Bank, formerly Samhwa Mutual Savings Bank, was bought by Woori Financial, the nation’s second biggest banking group by assets. Woori purchased Samhwa Mutual after the latter was suspended for six months by the Financial Services Commission in January due to inadequate capital.

Chairman Lee of Woori Financial group announced that “Woori Financial is currently focused on large corporate, small and mid-sized companies and households, but by acquiring savings banks, we will be able to cover all types of customers by providing microcredit finance services.”

Large conglomerates and SMEs account for 60 to 70 percent of Woori Financial’s business while the rest consists of retail.

On March 25, when Woori FG Savings Bank first started operation under its new owner, 30 percent of the 14,000 customers whose deposit accounts at former Samhwa Mutual Savings Bank had reached maturity between January and March decided to extend their accounts. Woori FG Savings Bank is Woori Financial’s 11th subsidiary.

The FSC has suspended eight savings banks and plans to put them up for sale after determining their viability. Woori’s rival banking groups – KB Financial Group Inc., Shinhan Financial Group Co. and Hana Financial Group Inc. – have also shown interest in taking over troubled savings banks in order to rescue the ailing savings bank sector and obtain synergy effects from consolidations

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Privatization of Woori Finance suspended

Brett Moffat — Mon, 20 Dec 2010 07:22:40 +0000

The South Korean government suspended the privatization plan for a stake in Woori Finance, reported the Edaily. The report cited Min Sang-ki, the head of the Public Fund Oversight Committee, which has been managing the sale.

During a media conference on Friday [17 December 2010], Min said that the committee will suspend the privatization procedure for a while and will resume it later after resetting the sale conditions.

Woori Finance is a listed South Korean financial holding company, in which the state-run Korea Deposit Insurance Corporation (KDIC) is seeking to sell a 57% stake via a competitive bidding process.

Min said that the main reason for suspending the sale is the committee’s wish to ensure a valid competition structure. The committee will review the privatization conditions, and renew or add a new sale method to finish the privatization as early as possible. Min was cited as saying that the committee will also consider a block sale as an option.

The sales of Kyongnam Bank and Kwangju Bank were also canceled, the item noted.

As reported earlier, KDIC put a controlling stake in Woori Finance and two privately-held regional banks owned by Woori up for sale. Woori Finance has a market cap of KRW 11.7tn (USD 10.2bn).

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Vogo Fund likely to bid for more than 35% stake in Woori Finance

Brett Moffat — Thu, 16 Dec 2010 07:56:03 +0000

South Korean Vogo Fund will likely bid for more than a 35% stake in Woori Finance, reported the Korea Economic Daily.

The report cited an unspecified insider at the private equity fund as saying that the fund will make a bid aiming to acquire the management rights in Woori, and plans to acquire 35%~40% stake in the listed South Korean financial firm.

According to an earlier report, the government may delay the sale indefinitely since the consortia of Woori Finance had declared that it would not bid unless the seller eases the criteria for privatization because there could not be a bidder other than the consortia to bid for a controlling stake.

Meanwhile, the South Korean government is likely not to relieve the sale criteria upon request of the consortia of Woori, according to a report in Financial News Daily. The report highlighted a comment of Jin Dong-soo, the head of Financial Services Commission, that the most important goal in the privatization of Woori is maximizing returns. The report explained that the comment means it could not accept the request of the consortia to ease the criteria in the sale which will make the sale process competitive.

As reported earlier, KDIC had put a controlling stake in Woori Finance and two privately held regional banks owned by Woori up for sale. Woori Finance has a market cap of KRW 11.6tn (USD 10.17bn).

Source: Korea Economic Daily (translated)

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Woori Finance sale draws widespread interest

Brett Moffat — Mon, 22 Nov 2010 23:53:15 +0000

The ongoing sale of South Korean government’s stake in Woori Finance has drawn interest from several overseas financial banks, reported the Seoul Economic Daily.

The report cited an insider at Public Fund Oversight Committee as saying that two to three Chinese banks have requested sell-side advisor a teaser letter in the sale. Public Fund Oversight Committee is a government organization that is in charge of the privatization of Woori Finance, the listed South Korean financial company. According to the report, two to three European banks have also requested the guideline document.

Meanwhile, Daegu Bank, a potential bidder for Kyongnam Bank and Kwangju Bank of Woori, has mandated a consortium of UBS and Goldman Sachs as the financial advisors for the potential acquisition. The report disclosed this information without citing a source.

The unsourced part of the report also revealed that a consortium led by The Kyongnam Chamber of Commerce & Industry will join the race to acquire Kyongnam Bank. The consortium has signed an agreement with an individual Korean-Japanese investor to raise KRW 280bn (USD 247m) as a part of a financing plan for the potential acquisition, it added.

As reported earlier, the South Korean government has announced the sale of Woori Finance and its subsidiaries, Kyongnam Bank and Kwangju Bank.

Source: Seoul Economic Daily

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Hana Financial prefers KEB over Woori Finance

Brett Moffat — Mon, 22 Nov 2010 12:33:29 +0000

Hana Financial, the listed South Korean financial holding company, is more likely to buy a stake in Korea Exchange Bank (KEB) than to bid for a stake in Woori Finance, reported the Seoul Economic Daily.

The unsourced report said that Hana will complete full negotiations with Lone Star before 25 November over the deal terms for the stake in KEB.

KEB is a South Korea-listed lender in which Texas-based Lone Star is seeking to sell a 51% stake. Woori Finance is a listed Korean firm in which the South Korean government is seeking to offload a controlling stake via a competitive bidding process.

Meanwhile, the South Korean state-run Korea Development Bank (KDB), which showed interest in buying the stake in KEB, has faced opposition from the government over the potential acquisition, according to a report in Chosun Ilbo.

The report cited KDB president Min Yoo-sung as saying he had discussed the potential acquisition of KEB with the government, but both decided that the scenario is unlikely to be sought.

See here for the full history of the KEB sale.

Source: Seoul Economic Daily, Chosun Ilbo (translated)

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Advisors start due diligence on Kwangju Bank, Woori I&S

Brett Moffat — Wed, 29 Sep 2010 07:59:18 +0000

The state-run Korea Deposit Insurance (KDIC) and its financial advisors started sell-side due diligence on Kwangju Bank and Woori Investment & Securities, both units of Woori Finance, on 27 September, reported the Seoul Economic Daily.

The report cited financial sector sources who said the result are expected in early November and estimated that a sale notice would then be posted around mid November.

For more information on the privatization of Woori Finance see here.

Source: Seoul Economic Daily (translated)

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