Chief regulator shows confidence in attracting competitive bidder


The Public Fund Oversight Committee will put up the state-controlled Woori Financial Group for auction again on Monday.

In a statement on Sunday, the PFOC said it would attract preliminary bidders for the nation’s largest financial group by July 27 after making official notification of the sale on April 30.

The new sale project comes after financial authorities failed to attract a preferred bidder for Woori Financial several times between 2010 and 2011.

The PFOC said it has decided to skip the procedure of accepting “letters of intent” and receive the preliminary bids directly from potential investors as the initial step.

“After accepting the bid proposals for the next three months, we will select a short list,” the committee said.

Investors on the short list will be entitled to conduct due diligence on Woori Financial. Following the due diligence, the PBOC is scheduled to accept financial bids.

A preferred bidder, picked by the committee among the final round of investors, will conduct detailed due diligence on the state-invested financial group.

The negotiations over the auction price and sale terms between the preferred bidder and financial authorities is likely to continue until the fourth quarter of 2012.

The Financial Services Commission, the decision-making regulatory body of the PFOC, said it would allow either an acquisition or merger.

The regulator stressed that it would sell Woori Financial in a “block deal,” under which entire units of the group will be sold off to an investor as a package.

FSC chairman Kim Seok-dong, in his meeting with reporters over the weekend, said he was optimistic about recouping public funds, which were injected into Woori in 2001, this year.

“The market situation for the sale is better than that of last year at least. Woori Financial has also been in a decent position in asset soundness,” he said.

While some analysts argue that attractive sale terms are necessary for a success of the government-led Woori sale project, the FSC chief said the authorities will not seek any revision of enforcement ordinances.

Critics cite bidding prices that may be too high as one of the major hurdles under the current laws.

Under the situation that financial authorities seemingly want to sell Woori Financial to another financial group, bidding prices could exceed 10 trillion won ($8.84 billion) as a merger between financial groups requires trading of at least 95 percent stake.

“It would be difficult for a single financial group to raise funding as long as laws or enforcement ordinances are not revised,” an analyst said.

Though the FSC had strived to revise the ordinances and lower the minimum stake level from 95 percent to 50 percent, a group of ruling and opposition lawmakers blocked the move last year.

Last Friday, unionized workers in the financial industry criticized top regulator Kim for his alleged move to allow global private equity funds to participate in the coming bidding.

“After winking at Lone Star Funds’ reaping huge gains via trading of Korea Exchange Bank shares, chairman Kim Seok-dong is seeking to make Woori Financial become another target of foreign funds,” they said.

Kim reversed his position within a year. In May 2011, he clarified that the authorities will hand over the group to a “Korean” bidder.

By Kim Yon-se (kys@heraldcorp.com)