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Woori Financial stake sale draws strong interest from investors Eighteen companies, including KT, Hoban Construction, and PE firms submit LOIs

Translated by Kim So-in 공개 2021-10-13 08:24:24

이 기사는 2021년 10월 13일 08:06 더벨 유료페이지에 표출된 기사입니다.

A sale of a 10% stake in Woori Financial Group owned by the Korea Deposit Insurance Corporation (KDIC) has drawn strong interests from potential investors amid hopes for the group’s full privatization.

A total of 18 potential investors, including financial institutions, private equity firms, and foreign investors have submitted letters of intent (LOIs) to buy 10% of Woori Financial owned by the KDIC on Friday, according to industry sources.

Shortlisted candidates will conduct due diligence from October 18. Finial bids should be submitted by November 18, with a final decision expected to be made on November 22.

The KDIC said individual investors and quantities could not be disclosed at the request of investors. However, KT, Hoban Construction, eBest Investment & Securities, KTB Asset Management, Glenwood Private Equity, and Eugene Private Equity, and employee stock ownership association are reportedly among the 18 investors that submitted LOIs.

Analysts said the deal is attractive to potential investors as they can secure a stake in the financial group amid rising bank shares. Domestic bank shares rose 2.6% last month thanks to expectations for better financial performance after a possible rate hike, while Kospi declined 4.1% from a month ago.

Given its banking-oriented business, Woori Financial is expected to benefit the most from the possible rate hike compared to other Korean banks. Woori Bank accounted for 90.1% of the group’s net profit of 1.42 trillion won ($1.18 billion) in the first half of this year, whereas its rivals generated 53.4%-71.5% of their net profits from their banking businesses.

The financial conglomerate has yet to complete its business portfolio as a comprehensive financial group. Woori Financial doesn’t have non-banking subsidiaries such as brokerage, insurance, and venture capital, which is the reason the group has a lower price-to-book ratio of 0.34 times compared to its domestic rivals, with KB standing at 0.48 times, Shinhan 0.45 times, and Hana 0.4 times.

The group, however, has more room to expand its presence through an inorganic growth as it has secured about 1.5 trillion won through a series of senior debt and hybrid bond issuance since last year.

The financial conglomerate is also set to get approval from the Financial Supervisory Service on using the internal ratings-based approach for calculating risk-weighted assets, which will boost the group’s BIS capital adequacy ratio by around 120 basis points.

After the upcoming stake sale, the financial services firm will be a step closer to full privatization in around 20 years, heightening hopes for higher corporate value. (Reporting by Jang-jun Lee)
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