Middle East hunt for Woori buyers

Finance

Published: 27 Aug. 2015, 20:44

Middle East hunt for Woori buyers

Middle East-based funds including Abu Dhabi’s state fund may buy stakes in Woori Bank, a move that would bring to fruition many years of futile efforts by the government to privatize the institution.

Financial Services Commission (FSC) Vice Chairman Jeong Chan-woo is scheduled to tour Middle Eastern countries next week to meet with officials from state funds in the region, including the Abu Dhabi Investment Council (ADIC), Kuwait Investment Authority (KIA), Investment Corporation of Dubai (ICD) and Qatar Investment Authority (QIA).

Sources say his tour is to drum up and gauge interest in Woori Bank.

“The trip to the Middle East is for assessing interest [in Woori Bank],” a senior FSC official said.

Of the group, ADIC is said to have shown the keenest interest.

“A number of Middle East funds have consistently shown interest in Woori Bank since 2010. The FSC probably has continued its contact with them as they were seen as the most likely buyers,” according to a banking industry insider.

A public fund management committee under the FSC announced last month that it aimed to sell Woori Bank stakes to multiple investors, splitting the 51.04 percent stake owned by the Korea Deposit Insurance Corporation into several pieces, ranging from 4 to 10 percent stakes. The government earlier tried to sell a large chunk - a 30 to 40 percent stake - to a single investor, but failed, forcing it to offer smaller pieces to multiple investors.

Its priority has been to find long-term investors and sell shares at at least 13,500 won ($11.44) each, the break-even point for the government’s investment in Woori. Woori Bank shares closed at 8,890 won on Thursday, 34 percent below the target price.

Given the latest massive falls in crude oil prices, however, the Middle East funds whose wealth is directly tied to oil prices may not be so willing to pay big premiums.

“Conditions [for sale] are not ideal and local banks have been struggling lately,” said an anonymous analyst. “Their future is not so bright either with the aging demographics and so on”.

Despite the unfavorable backdrop, however, Middle East funds are still a rich source. ADIC, with $90 billion in assets, is one of the biggest state funds in the world along with Abu Dhabi Investment Authority. KIA is also a major state fund on a global scale, with an asset size of $548 billion, while ICD and QIA’s asset sizes are estimated to be $7 billion and $25.6 billion each.

BY PARK JUNG-YOUN [park.jungyoun@joongang.co.kr]