By Kang Seung-woo
The long-awaited privatization of state-run Woori Financial is in jeopardy again due to a lack of valid bidders.
The Korea Deposit Insurance Corp. (KDIC) announced Wednesday that only one investor offered a preliminary bid for a controlling stake in the nation’s largest financial holding firm by assets.
Three local private equity funds _ MBK Partners, TStone Corp. and Vogo Investment _ submitted letters of intent in June, but only a consortium of MBK and Korean Federation of Community Credit Cooperatives took part in the preliminary bid that closed at 5 p.m. on the day.
Vogo Investment said that it had decided not to join in the bidding due to a change in its financial investors and low chances of an acquisition, while controversy over the Woori Finance sale and the recent sharp fall in Woori Finance's share prices prevented TStone Corp. from offering a bid.
As a result, the sale process failed to meet the government’s requirement that there should be more than two valid bidders to acquire Woori.
“Although the Public Fund Oversight Committee (PFOC)’s official decision is left, the government will not be able to proceed with the sale of Woori Financial due to a lack of valid bidders,” said an official of the PFOC.
According to the Financial Services Commission (FSC), the PFOC, the country’s public fund watchdog, will Friday discuss whether it will continue the sale.
If the deal falls through, the setback will be another major blow to the Lee Myung-bak administration, which has strived to transfer government-owned financial institutions including Korea Development Bank (KDB) Financial and Woori to private hands.
In December last year, the PFOC suspended its move for the sale of a 56.97 percent stake in Woori Financial, held by the KDIC, due to the absence of a valid bidder.
In the wake of the Asian financial crisis, the government in 1998 spent 12.8 trillion won in public funds to bail out Woori Bank and several financial companies that later merged into the first financial holding company in Korea in April 2001.
As part of collecting public funds, the KDIC started trimming its stakes at its initial public offering (IPO) in June 2002 and four block sales between September 2004 and April 2010 reduced its stake to the current level.