SEOUL, Aug 16 (Reuters) - South Korean financial behemoth Woori Finance put up for sale a controlling stake in its brokerage unit Woori Investment & Securities Co Ltd on Friday, in a deal that analysts say may top 1.2 trillion won ($1.07 billion).
The sale of the brokerage unit, and three other affiliates - an asset manager, a savings bank and a life insurance joint venture with Aviva Plc - is part of the government’s plan to recoup some of the money it spent on bailing out the country’s biggest financial holding company.
The government is trying to get back about half of the 12.8 trillion won in taxpayers’ money it injected into Woori Finance since the Asian financial crisis in the late 1990s. The government’s three previous attempts to offload its stake in the group had failed because of a lack of bidders.
South Korea’s Financial Services Commission, the country’s top financial regulator, has vowed to return Woori Finance to the market quickly.
Bidding interest has been lacklustre largely because few domestic firms have the financial muscle to take on the entire government stake, while U.S. fund Lone Star’s years-long battle to offload a stake in Korea Exchange Bank remains fresh in foreign investors’ minds.
Among Woori Finance’s assets is Woori Bank, which accounts for the bulk of the group’s earnings. The government plans to hold a sale of the bank by the end of next year.
Woori Finance’s brokerage unit is expected to garner more attention than Woori Bank, which is seen attracting fewer prospective bidders, if at all.
“The size of Woori Bank, and the government’s intention not to sell it to a foreign buyer, means a complete sell-down of the state’s stake will remain very challenging,” Fitch said in June.
Woori Investment & Securities is the largest South Korean brokerage by assets as of end-March. Preliminary bids are due on Oct. 21.
Woori Finance holds a 37.9 percent share in the brokerage, with the stake worth 886.3 billion won on the market as of Wednesday.
Local financial holdings companies KB Financial Group Inc and unlisted Nonghyup Financial Group Inc have already flagged their interest in the brokerage.
“Woori Investment & Securities’ capabilities in investment banking and research will be helpful in terms of portfolio diversification (from) our traditional strengths in retail banking,” Nonghyup Financial’s Chairman Yim Jong-yong told Reuters last week.