Woori Financial Accelerates Privatization... Possibility of Additional Sales in Second Half as Stock Price Rebounds

Government Plans to Sell All Forecast Holdings by 2022
Sale Delayed Last Year Due to COVID-19... Sale Expected to Accelerate with Stock Price Rebound This Year
Additional Share Sales Likely After Lock-up Ends in July

[Asia Economy Reporter Jin-ho Kim] From the second half of this year, the complete privatization (share sale) process of Woori Financial Group is expected to gain momentum. After a significant decline last year, the stock price has recently entered a clear upward trend, leading to evaluations that the government's share sale roadmap targeting next year is now on track. Following the sale of a 2% stake to domestic and foreign institutional investors in April, additional share sales are being discussed for after July.

On the 11th, an official from the Financial Services Commission’s Public Fund Committee, which is leading the share sale, stated, "Once the lock-up period expires after July, we will decide on additional sales based on market conditions," adding, "There are many factors to consider comprehensively, such as demand and supply, but the rise in stock price is analyzed as a favorable environment."

The Financial Services Commission announced the ‘Woori Financial Remaining Shares Sale Roadmap’ in 2019. The plan was to sell all shares held by the Korea Deposit Insurance Corporation (KDIC) under the Financial Services Commission in three to four rounds, with up to 10% sold at a time by next year. However, last year, Woori Financial’s stock price did not come close to KDIC’s principal recovery price (about 12,000 KRW) due to the COVID-19 crisis, causing setbacks in the share sale.

However, the situation changed this year, accelerating the share sale process. This was influenced by the rapid rise in bank stocks as interest rates began to increase early this year. Accordingly, KDIC sold 2% of its shares (14,445,354 shares) to domestic and foreign institutional investors in April at a price of 10,300 KRW per share. Since the stock price had somewhat recovered, the decision focused more on the speed of completing the roadmap rather than recovering the principal.

At that time, the Public Fund Committee stated, "If the stock price recovers following the COVID-19 recovery, it will be possible to sell at a more appropriate price than now," and added, "This sale emphasized prompt recovery."

Stock Price Hits 52-Week Highs Daily... Increased Possibility of Additional Share Sales in Second Half

While the government emphasized the importance of swift sales in the previous share sale, Woori Financial’s stock price has continued to rise daily, increasing the possibility of additional share sales in the second half. As of the previous trading day, Woori Financial’s stock price was 11,300 KRW, a significant 72.25% increase compared to 6,560 KRW on March 23 of last year. It has also risen about 10% compared to the price at the sale just a month ago.

In particular, if the stock price rises more than 8% from the previous closing price (11,300 KRW), KDIC can expect profits. In this case, it aligns with the government and political circles’ principle of ‘maximizing public fund recovery’ to avoid losses after investing taxpayers’ money, which is evaluated as completely alleviating concerns about the full privatization of Woori Financial.

A banking industry official said, "The so-called ‘fire-sale’ controversy was one of the biggest obstacles to the government’s complete privatization of Woori Financial," adding, "If the stock price exceeds KDIC’s principal recovery price, the government will have more flexibility in share sales."

According to the financial sector, the next share sale by the Public Fund Committee is expected in the second half after July. This is because a lock-up period was applied to KDIC’s remaining shares (15.25%, about 110.16 million shares) after the April sale. With expectations of dividend policy recovery and possible base rate hikes in the second half, there is a high possibility that Woori Financial’s stock price will rise further.

A financial sector official hinted, "KDIC is steadily conducting preliminary market research for share sales," adding, "We understand they are busy attracting new investors in a way that minimizes the impact on the stock price."

This content was produced with the assistance of AI translation services.