Buyout Funds Revive Woori Stake Sale After Withdrawal of South Korea Banks
South Korean buyouts firms made preliminary bids for a stake in Woori Finance Holdings Co., reviving a $5.9 billion sale that faced collapse after banking groups withdrew.
Private-equity funds Vogo Investment, MBK Partners Ltd. and TStone Corp. submitted letters of intent, according to a person with direct knowledge of the sale who declined to be identified as the matter is confidential. Grace Han, director of finance and operations of Seoul-based Vogo, declined to comment, as did officials at MBK Partners and TStone.
President Lee Myung Bak’s plan to privatize South Korean banks rescued during the Asian financial crisis lost momentum after an earlier attempt to sell Woori failed. The latest effort comes as U.S. private-equity firm Lone Star Funds struggles to offload its stake in Korea Exchange Bank (004940) and analysts ask whether local funds have the financial firepower to buy Woori.
“There remains the question of how successful the private- equity funds could be in raising funds for the acquisition,” said Koo Kyung Hwe, a banking analyst at Seoul-based Hyundai Securities Co. “An acquisition by a fund will come under close scrutiny by the regulators.”
Korea Deposit Insurance Corp. didn’t disclose names of the bidders in its e-mailed statement yesterday. Bidders were asked to submit letters of intent for a minimum 30 percent stake by then, the Public Fund Oversight Committee said on May 17.
Sold in Package
Woori, whose initial sale collapsed for lack of investor interest in December, will be sold in a package with affiliates including Woori Investment & Securities Co. and provincial bank units, the committee said in May.
Woori rose 0.4 percent to 13,850 won as of 11:04 a.m. in Seoul trading. The 61-member Korea Financial Industry index was unchanged. The 57 percent stake is valued at 6.3 trillion won ($5.9 billion) based on yesterday’s share price.
The sale process hit a fresh snag last week after the Financial Services Commission dropped a proposal to ease rules that would have allowed financial holding firms to own less than 95 percent of a rival after acquiring a stake. The FSC had sought to allow holding companies to own as little as 50 percent of rivals that have been bailed out by taxpayers.
Woori was created in 2001 as a holding company for banks that the government rescued following the Asian financial crisis in 1997 to 1998, as part of a push to make the financial industry more competitive. The government spent 12.8 trillion won to aid Woori and has recouped 5.3 trillion won so far through block sales of shares.
JPMorgan Chase & Co., Samsung Securities Co. and Daewoo Securities Co. were hired in September to help Korea Deposit sell its stake.
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