Korea sells 9% of Woori stake at $1bln

Lender’s privatization gained headway when institutional investors acquired total of 72.54mln shares at 16,000 won each.

State-run Korea Deposit Insurance Corp. on Friday said it raised about $1.03 billion (1.16 trillion won) by selling a 9% stake in Woori Finance Holdings Co. through a block sale that will spur on the privatization process of South Korea's largest financial holding company by assets as well as a major reformation of the country's banking sector.

KDIC, in a statement, said it sold 72.54 million Woori shares to institutional investors at 16,000 won per share, which was at a 0% discount to Thursday's closing price of 16,000 won. A person familiar with the situation said Friday that KDIC ended up selling more shares than initially planned due to strong market demand; the government arm at first sought to sell the equivalent of a 7% stake in Woori, as it had done in November.

The sale pushes forward the government's plans to hand over control of Woori, which was formed in April 2001 to oversee troubled Korean banks, to the private sector by either selling a controlling stake or merging it with another financial institution. The government is expected to use this process to facilitate the emergence of a Korean financial heavyweight that can compete on the international stage, thus ruling out the prospects of a foreign partner for Woori.

South Korea's KB Financial Group Inc. and Hana Financial Group Inc. are seen as the most likely merger partners for Woori. KB's strength in consumer banking will be complemented by Woori's corporate banking business, while the smaller Hana would be able to leapfrog its competitors through a merger.

View the full story in the Wall Street Journal.