Can Goldman Sachs make a killing with Woori?

By Kim Jae-won

A former Goldman Sachs advisor Sunday said that the U.S.-based global investment banking giant may be able to score a hat-trick with its investment in Woori Financial Group, following good results in Kookmin Bank and Hana Financial Group.

Goldman reportedly plans to chip in 600 billion won for a joint bid for Woori Financial with MBK Partners, a Seoul-based private equity company, which submitted a letter of intent to buy shares of Woori Financial. The government wishes to unload its 57-percent stake in Woori, and three Korean private equity companies, MBK, Vogo Fund and T-Stone, showed their interest in the biggest financial group in the nation.

“Goldman has raised big profits in Kookmin Bank. It bought shares of Kookmin at a cheap price after the 1997-98 Asian financial crisis, and sold them out after their value spiked. Goldman is good at this kind of business,” said Kim Ki-hwan, former advisor to Goldman Sachs Securities’ Seoul office and president of the Seoul Finance Forum, a non-profit organization at the Ministry of Strategy and Finance.

Goldman invested $500 million in Kookmin in June 1999 ― $300 million in stocks and $200 million in convertible bonds ― and recouped more than $1.2 billion by selling them after 2002.

Kim said the market will react positively to Goldman’s taste for Woori because the IB giant has a good reputation for boosting the performances of companies. The share price of Woori Finance rose slightly to 11,300 won Friday, up 100 won, or 0.89 percent from the previous day.

Kim added that it is nothing strange that Goldman wants to buy Woori shares.

“To buy stocks at a cheap price and sell them later is its usual business as an investment bank,” he explained.

The New York-based investment bank also gained big profits from its investment in Hana Financial Group. Goldman took home 3.2 trillion won by selling its 3.1 percent stake, or 7.5 million shares, in the fourth-largest financial group in Korea in April at a price of 43,000 won per share. Goldman initially invested 530 billion won in December 2005, buying Hana shares at 30,000 won.

But analysts say there is a long way for Goldman to go for to achieve the triple crown because the financial regulator is reluctant to allow MBK or other private equity funds to take over the helm of the local banking behemoth.

“The Financial Services Commission may not a give the green light to private equity companies because there is great opposition to them from Woori’s union and the public,” said a Seoul-based financial expert, on condition of anonymity.

Goldman Sachs, founded in 1869, provides merger and acquisition advice, underwriting services, asset management and prime brokerage to its clients, including corporations, governments and individuals.

MBK Partners confirmed that it will bid for Woori Financial, but declined to comment whether Goldman Sachswill join. The Korea Times contacted a spokesman for Goldman Sachs’ Seoul bureau, but he was not available for comment.