The government’s latest decision to dispose of its remaining stakes in Woori Financial Holdings is seen as a turning point for South Korea’s financial sector, indicating the withdrawal of decadeslong public interference triggered by the 1997 Asian financial crisis.
While the financial holding company will henceforth gain further momentum in the market as a fully privatized player, state coffers will at last be able to recoup taxpayers’ money.
According to the Financial Services Commission on Tuesday, the 18.32 percent owned by the Korea Deposit Insurance Corporation will be sold in two or three tranches starting next year. The unloading of the shares is slated to be completed by 2022 at the latest, with up to 10 percent stake put up for sale in each round.
“Members of the Public Fund Oversight Committee have reached a consensus that Woori Financial needs to carry on its privatization momentum,” said an official of the financial regulator.
Woori Financial affiliates, centered on Woori Bank, were realigned into a financial holding company structure earlier this year, buckling down to the market race with other top-tier rival groups.
The government’s withdrawal is expected to lift considerable weight off Woori, which will be freed from direct government influence after more than two decades.
Amid the aftershock of the 1998 Asian financial crisis, which dismantled key industries including the banking sector, Seoul had injected 12.8 trillion won ($11.4 billion) into Woori Financial. Of the amount, 11.1 trillion won, or 87 percent, has been recollected so far, with the KDIC still holding 18.3 percent of the stakes.
With the pressure of public funds out of the picture, Woori Financial Group is expected to aggressively speed up its merger and acquisition strategies under the lead of Chairman Sohn Tae-seung, targeting expansion once again into a comprehensive financial group.
Its most recent action was the acquisition of local real estate management company Kukje Asset Trust, adding to its previous purchase of two asset managers -- Tongyang Asset Management and ABL Global Asset Management.
The latest announcement also indicates the government has decided to stop delaying as to the timeline of Woori’s privatization, which has added volatility to the firm’s share price over the years. Uncertainty stemming from such actions has kept private investors eyeing Woori at bay.
The FSC said Tuesday that Woori’s stock price, averaging 13,800 won, will enable the government to retrieve 100 percent of the capital it had poured into the holding company.
The KDIC had owned a 51.06 percent stake until 2016. Then it sold around 30 percent stake to a number of investors, including IMM Private Equity, Mirae Asset Global Investments, Kiwoom Securities, Korea Investment & Securities, Hanwha Life Insurance, Tong Yang Life Insurance and Eugene Asset Management.
By Jung Min-kyung (email@example.com)