Pan Ocean eyes stake in Woori Financial Group - Korea Times
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Pan Ocean eyes stake in Woori Financial Group

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Woori Financial Group headquarters in central Seoul / Korea Times file
Woori Financial Group headquarters in central Seoul / Korea Times file

Stock sell-off to help privatization of banking group for first time in 23 years

By Yi Whan-woo

Pan Ocean, the bulk carrier arm of Harim Group, is seeking to acquire up to a 10 percent stake in Woori Financial Group, industry sources said Thursday.

While Harim Group remained mum on the matter, its interest in Woori Financial Group is believed to be aimed at obtaining steady dividends as the U.S. Federal Reserve and central banks in other countries are set to increase their key interest rates, which is a plus factor in terms of strengthening the bottom lines of banks.

Additionally, stock market analysts say Woori Financial Group's stock is undervalued.

Harim started as a small chicken farm, rising to become a major business conglomerate via sizable acquisitions. Its cash-cow affiliate Pan Ocean attempted to acquire the country's low-cost carrier Eastar Jet earlier this year.

"The banking sector is anticipated to boost profits from the increased interest rate and Woori Financial Group will not be an exception," an analyst said. "The more they buy Woori Financial Group shares, the higher the chances of potential returns."

The sources said the shipping company is among 18 interested parties, including private equity funds (PEFs) and overseas investors that applied to acquire the stake in Woori Financial Group.

The main entrance of state-run Korea Deposit Insurance Corp. / Korea Times file
The main entrance of state-run Korea Deposit Insurance Corp. / Korea Times file

The planned sell-off is being carried out by Korea Deposit Insurance Corp. (KDIC), a state-run institution and the largest shareholder of the banking group, under the approval of the Public Fund Oversight Committee.

The committee, comprised of private- and public-sector representatives, is tasked with outlining the guidelines for the corporate restructuring of financial institutions funded by taxpayers' money and retrieving the capital at an optimal time.

KDIC wants to liquidate a maximum 10 percent of the 15.13 percent stake it owns in Woori.

The sell-off is seen as a lucrative opportunity for investors, as KDIC wants to fully privatize the banking group by next year.

If realized, Woori Financial Group will be completely free of government ownership for the first time in 23 years, after it was created in 2001 by combining a number of Korean banks that had become insolvent during the 1997-98 financial crisis.

Back then, the government injected 12.7 trillion won ($10.6 billion) into the ailing lenders.

The KDIC did not reveal more about the 18 applicants, citing privacy reasons.

When asked about the benefits the successful applicant could expect, a KDIC official said, "a much-anticipated surge in Woori Financial Group stock prices."

"The sell-off of its 10 percent stake means KDIC will lose its rights as a non-executive director and this is expected to result in a rise in the stock price," the official said on condition of anonymity.

The official noted that the government retrieved 89.6 percent of the state capital injected into the banking group, including a two percent stake that was sold in April through block sales and open bidding.

The KDIC also plans to liquidate the last remaining 5.13 percent stake at "the nearest possible date."

Whoever purchases the entire 10 percent stake in Woori Financial Group will emerge as its biggest shareholder, ahead of the National Pension Service with 9.8 percent.

Yi Whan-woo

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