Woori Financial marks sharp rise in market cap after successful privatization

Woori Financial Group, headquartered in central Seoul, is enjoying the sharpest rise among the country's major banking groups this year in terms of market capitalization, after fully privatizing on Dec. 9. Korea Times file

By Yi Whan-woo

Woori Financial Group is going strong on the stock market, after completing 23 years of government-led ownership and fully privatizing a little more than a month ago.

Its market capitalization has grown by 17.3 percent, the sharpest rise seen on the benchmark KOSPI this year compared to the three other largest banking groups ― KB Financial Group at 12.2 percent, Hana Financial Group at 8.1 percent and Shinhan Financial Group at 5.4 percent.

Increased market capitalization is prevalent among banking groups in general, backed by the latest hike in the key interest rate and hopes for record yearly earnings.

“But even so, Woori Financial Group's performance is noteworthy,” a market observer said, adding that its full privatization is helping to build more favorable investor sentiment.

The privatization allows the financial holding firm to be flexible in expanding its business, as is seen from its plan to advance into securities, insurance and other non-banking sectors through M&As, in a bid to further diversify its portfolio.

Woori is the country's only banking group without securities or insurance business units.

Kim Hyun-ki, a Hi Investment & Securities analyst, said that Woori Financial Group shares were undervalued for years but now they are “on track for normalization.”

A buying spree of overseas investors is also being seen as a plus for Woori's market cap, which amounts to 10.8 trillion won ($9 billion), up from 9.2 trillion won at the end of the year.

Overseas shareholding in the company inched up by 0.07 percentage points to a record high of 31.21 percent, Tuesday. The previous record was 31.22 percent in December 2019.

Overseas investors' enlarged stake in Woori is expected to continue growing, considering the fact that they own a 70.96 percent stake in KB, 68.97 percent of Hana and 61.32 percent of Shinhan.

“And accordingly, overseas investors buying it will make Woori's stock outlook upbeat,” an industry source said.

The company was fully privatized on Dec. 9, when the state-run Korea Depository Insurance Corp. (KDIC) completed the sale of a 9.33 percent stake in Woori to five private parties that were chosen thorough a bidding process.

One of the five parties was a joint group of Woori employees, who now hold a 9.8 percent stake combined, constituting the largest shareholder.

KDIC had previously been the largest shareholder of the company with a 15.25 percent stake.

The Dec. 9 sale therefore was seen as the last remaining step for KDIC to concede its rights as a non-executive director, and to free Woori from the government's control, after government capital was injected into the firm in 1998.

The banking group was created by combining a number of Korean banks that had become insolvent during the 1997-98 financial crisis.