ID :
202281
Fri, 08/19/2011 - 09:59
Auther :
Shortlink :
https://oananews.org//node/202281
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S. Korea suspends Woori Finance sale
SEOUL, Aug. 19 (Yonhap) -- South Korea on Friday decided to suspend its sale of Woori Finance Holdings Co. in another setback to its decade-long effort to privatize the country's largest financial group by assets.
The decision came after a consortium led by local private equity fund MBK Partners Ltd. made a lone bid to purchase a minimum 30 percent of the government's 56.97 percent stake in Woori Finance on Tuesday.
"Only one consortium submitted a proposal, which doesn't lead to a valid competition. (We) decided to halt the current proceedings," the Public Fund Oversight Committee said in an e-mailed statement.
The committee also said a newly established panel will continue to push for the sale of Woori Finance.
The solo bid had raised concerns the sale plan would again fall through as the government had stressed it would only proceed with the sale if two or more buyers competed in the bidding. Two other homegrown private equity funds, TStone Corp. and Vogo Investment, which had also submitted letters of intent, did not take part in the preliminary bidding.
The Friday result marks the latest failure in the government's attempt to privatize Woori Finance. The sale of the No. 1 banking group is one of the Lee Myung-bak administration's top priorities as part of its broader plans to privatize financial institutions, including state-run Korea Development Bank, to raise competitiveness in the financial sector.
South Korea has also been seeking to retrieve the 12.8 trillion won (US$11.8 billion) of public funds injected into five ailing companies in the aftermath of the 1997-98 Asian financial crisis. The five firms were later incorporated into Woori Finance.
The government first reduced its stake in Woori Finance to 88.2 percent after selling a combined 11.8 percent interest in an initial public offering. It has since continuously reduced its stake via block sales.
After efforts to privatize the group were derailed by the 2008 global financial crisis, the government in July 2010 unveiled a plan to revive the sale. The plan, however, hit a snag after two prospective buyers withdrew their bids due to expensive premium costs late last year.
The government's plan in June to sell Woori Finance to KDB Financial Group Inc. was also scrapped due to strong public criticism.
Market watchers, meanwhile, said the FSC's botched attempt to ease a law on financial services groups was one reason that hampered the sale plan. Due to the law that requires financial services groups to purchase at least a 95 percent stake in a state-run holding firm, no banking group had submitted letters of intent for the Woori Finance deal.
They also said the recent plunge in Woori Finance's share prices may have pressured the government to suspend the process, since it does not abide by the policy goal of maximizing public fund redemption.
Shares of Woori Finance dropped more than 21 percent this year, pummeled by investor concerns on the first-ever U.S. credit rating cut and the eurozone's debt crisis.
The decision came after a consortium led by local private equity fund MBK Partners Ltd. made a lone bid to purchase a minimum 30 percent of the government's 56.97 percent stake in Woori Finance on Tuesday.
"Only one consortium submitted a proposal, which doesn't lead to a valid competition. (We) decided to halt the current proceedings," the Public Fund Oversight Committee said in an e-mailed statement.
The committee also said a newly established panel will continue to push for the sale of Woori Finance.
The solo bid had raised concerns the sale plan would again fall through as the government had stressed it would only proceed with the sale if two or more buyers competed in the bidding. Two other homegrown private equity funds, TStone Corp. and Vogo Investment, which had also submitted letters of intent, did not take part in the preliminary bidding.
The Friday result marks the latest failure in the government's attempt to privatize Woori Finance. The sale of the No. 1 banking group is one of the Lee Myung-bak administration's top priorities as part of its broader plans to privatize financial institutions, including state-run Korea Development Bank, to raise competitiveness in the financial sector.
South Korea has also been seeking to retrieve the 12.8 trillion won (US$11.8 billion) of public funds injected into five ailing companies in the aftermath of the 1997-98 Asian financial crisis. The five firms were later incorporated into Woori Finance.
The government first reduced its stake in Woori Finance to 88.2 percent after selling a combined 11.8 percent interest in an initial public offering. It has since continuously reduced its stake via block sales.
After efforts to privatize the group were derailed by the 2008 global financial crisis, the government in July 2010 unveiled a plan to revive the sale. The plan, however, hit a snag after two prospective buyers withdrew their bids due to expensive premium costs late last year.
The government's plan in June to sell Woori Finance to KDB Financial Group Inc. was also scrapped due to strong public criticism.
Market watchers, meanwhile, said the FSC's botched attempt to ease a law on financial services groups was one reason that hampered the sale plan. Due to the law that requires financial services groups to purchase at least a 95 percent stake in a state-run holding firm, no banking group had submitted letters of intent for the Woori Finance deal.
They also said the recent plunge in Woori Finance's share prices may have pressured the government to suspend the process, since it does not abide by the policy goal of maximizing public fund redemption.
Shares of Woori Finance dropped more than 21 percent this year, pummeled by investor concerns on the first-ever U.S. credit rating cut and the eurozone's debt crisis.
