Woori privatization hits further snag

The process of privatizing Woori Financial Group may once again be stalled with Vogo Fund hinting that it will not take part in the preliminary bids for the financial group.

The Korea Deposit Insurance Corp. currently holds 56.97 percent of Woori Financial Group. The state-run firm plans to sell more than 30 percent of its stakes in the financial group with premium for management rights.

Vogo Fund is one of the three private equity funds that submitted letters of intent to take part in the bid. The other two private equity funds are MBK Partners and T-Stone.

According to reports, Vogo Fund does not intend to take part in the preliminary biddings unless financial investors take the center stage in the negotiations.

In addition, with Vogo Fund having recently failed to form a consortium with Korea Investment Holdings taking part as a strategic investor, the private equity fund appears unlikely to be able to find another investor on time.

The already delayed process of privatizing Woori Financial Group appears to likely to take another turn for the worse as rumors continue to circulate about the private equity fund’s plans to pull out, industry watchers said.

At the beginning the process in October 2010, the government set out with the aim of maximizing profits, early privatization and aiding the advancement of the country’s financial sector in selling its stakes in Woori Financial Group.

However, the chances of the government obtaining any of the three goals appear to be getting slimmer as time passes.

While the government had first received letters of intent in November, the process of finding a new owner for its stakes in Woori Financial Group was halted with bidders pulling out.

In addition, Woori Financial Group shares crashed along with the KOSPI’s decline, which was fueled by global financial worries, dashing the government’s hopes of maximizing profits from the sale.

Woori Financial Group shares closed at 11,300 won ($10.5) on Friday, down more than 20 percent compared to the 14,250 won recorded at the end of trading on Aug. 1. At Friday’s closing price, the government stands to gain about 2.7 trillion won from the sale of 30 percent stakes in the firm, which is about 700 billion won less than the 3.4 trillion won the asset was worth at the beginning of the month.

By Choi He-suk (cheesuk@heraldcorp.com)