Government sells fraction of IBK shares

After years of effort, the government sold a small portion of its shares in the Industrial Bank of Korea yesterday, adding more than 265 billion won ($249.2 million) to state coffers, the Strategy and Finance Ministry said.

According to the ministry, it sold 23.24 million shares in the state-controlled IBK in an overnight bloc sale. The price per share was 11,400 won - 5 percent less than Tuesday’s close of 12,000 won. The price was 40 percent higher than the government initially paid.

“As part of efforts to sell the government’s shares in IBK based on this year’s budget plan announced in April, we have constantly monitored market conditions,” said a ministry official. “Recently, the stock price of IBK has hovered around 12,000 won and remained stable, creating a favorable market condition for selling shares.”

As of Tuesday, the average per share price of IBK this year was 12,074 won. Shares closed 4.17 percent lower yesterday at 11,500 won.

In the meantime, by letting go of 4.2 percent of its stock ownership in IBK, the ministry now holds 64.6 percent. The Korea Finance Corporation and the Export-Import Bank of Korea own a combined 3.5 percent share in IBK, while 31.9 percent is held by others.

“It is the first time since 2006 that the government sold IBK shares,” the official said. “We expect the favorable conditions to continue so that we’re able to sell the remaining shares.”

The Finance Ministry made it clear earlier this year that it would sell IBK shares without losing management control, meaning it would keep 50 percent plus one share.

The ministry has tried to market IBK stock by holding investor relations conferences along with the financial institution in London, New York and Hong Kong.

The sale was aimed at raising revenue for the Park Geun-hye administration to help pay for its massive welfare programs.

There were also efforts by the Lee Myung-bak government, but the focus was the privatization of the financial institution.

However, the sluggish economy following the global financial crisis made it unfavorable for investors to put their money into IBK shares.

BY LEE EUN-JOO [angie@joongang.co.kr]