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KB Financial Among Bidders for Woori’s Brokerage, Five Units

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Oct. 22 (Bloomberg) -- KB Financial Group Inc. is among firms bidding for Woori Finance Holdings Co.’s brokerage arm and five other units, as South Korea makes a fourth attempt to privatize the nation’s biggest financial group by assets.

KB Financial made an initial offer for a package of Woori Finance’s businesses consisting of its brokerage, asset management, life insurance and savings bank units, KB said yesterday in a regulatory filing. The owner of Korea’s largest bank made separate offers for Woori’s distressed-debt trading firm and leasing unit.

The six companies may fetch more than 1.5 trillion won ($1.4 billion) when combined, according to Nomura Holdings Inc., as the government sells its Woori assets separately and breaks with an all-or-nothing strategy that’s failed three times since 2010. NH Financial Group also made an offer for the brokerage-related package, the Seoul-based company said.

“Financial holding firms like KB and NH may have the best chances to win this race as they’re eager to diversify businesses and to beef up their securities units,” Jun Bae Seung, an analyst at Shinyoung Securities Co., said by phone from Seoul yesterday.

PineStreet Group, a Seoul-based investment advisory firm, also entered a bid for the brokerage-related assets, Vice Chairman Kim Myung Jeon said by phone from Seoul.

Taxpayer Bailout

The government is yet to announce the total number of bidders for Woori Investment & Securities Co., Woori Asset Management Co., Woori Aviva Life Insurance Co. and Woori FG Savings Bank following yesterday’s bid deadline. Total offers for Woori F&I Co., the distressed-asset trading unit, and leasing unit Woori Financial Co. are also yet to be disclosed.

Woori Investment rose 0.4 percent to 11,650 won at the close of trading in Seoul, valuing Woori Finance’s 38 percent stake at about 882 billion won. Shares of Woori Finance dropped 0.4 percent to 13,150 won. The benchmark Kospi Index rose 0.2 percent.

South Korea is trying to recoup taxpayer money spent more than a decade ago to bail out the nation’s weakest banks. The government said in June that it will sell Woori Finance’s assets in three parts after failing to woo buyers for its 57 percent stake as a package. Potential buyers were uninterested in paying for businesses that didn’t fit with their business models.

First Phase

The first phase of the latest approach lured 11 bids for Woori Finance’s two regional banks on Oct. 18. The company’s flagship Woori Bank, credit card business and other units will be sold next year.

The most recent sale attempt may provide the government’s best chance at divesting Woori Finance as separate assets will appeal to a wider array of bidders, CLSA Asia-Pacific Markets said in July. Nomura that month estimated the group of assets broken up could be valued at about $10 billion.

“For anyone who wants to grow in the area of securities and non-banking businesses, owning Woori Investment would make you a strong player,” Sohn Mi Ji, an analyst at Shinhan Investment Corp., said by phone from Seoul yesterday.

KB Financial Chairman Lim Young Rok, who took office in July, said on Aug. 14 he will consider takeovers to improve profit at its non-banking businesses. Former Chairman Euh Yoon Dae last year also studied possible bids for Woori Finance’s assets.

NH Financial

NH Financial, originally a farmers’ cooperative, operates seven affiliates including Nonghyup Bank and NH Investment & Securities Co., which took a 1 percent share of South Korea’s stock brokerage market in the year ended March, according to company filings.

KB Investment & Securities Co. and NH Investment are among 62 brokerages operating in South Korea as of June, according to Financial Services Commission data.

Buying Woori Investment, the country’s fourth-largest brokerage by market value, would give the winning bidder control of South Korea’s top merger and acquisition adviser and debt underwriter, according to data compiled by Bloomberg.

Daishin Securities Co. submitted bids for Woori Financial and Woori F&I, the brokerage said yesterday in a regulatory filing. Kiwoom Securities Co. handed in an offer only to buy Woori Asset Management, it said in a separate filing.

Woori Finance is seeking to sell its 38 percent stake in the brokerage business, 52 percent of Woori Financial, 99 percent of the insurance business it owns jointly with Aviva Plc and all of the asset management unit, Woori F&I and the savings bank.

Citigroup Inc. and Samil PricewaterhouseCoopers were hired to help arrange the sale of the six businesses.

Korea Deposit Insurance Corp., the state-run agency that owns the government’s 57 percent stake in Woori Finance, said earlier this month that it received four bids for regional lenders Kyongnam Bank and seven offers for Kwangju Bank. It plans to accept final bids in December and complete the sales next year.

The banks were folded into Woori Finance in 2001 after the government created the holding company for lenders rescued after the Asian financial crisis in 1997-1998.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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