[Im Jong-ryong 200 Days] Will the Final Privatization Solution Become a Precedent for Public Fund Recovery?

Woori Financial Group’s “final solution” standing at the threshold of full privatization after 25 years is drawing attention. Woori Financial plans to purchase the remaining 1.23% stake (approximately 9.36 million shares) owned by the Korea Deposit Insurance Corporation (KDIC) as treasury stock. From KDIC’s perspective, this strategy maximizes the recovery of public funds, while Woori Financial can accelerate the timing of full privatization?a true win-win strategy. It is evaluated that the background behind this decision was the personal skill of Chairman Lim Jong-ryong, who promoted Woori Financial’s privatization during his previous tenure as Financial Services Commission chairman.

Woori Financial first proposed to KDIC its intention to repurchase treasury shares (in May) and the “method of concluding a sales contract after signing an agreement” (in July), leading to the signing of a basic stock transfer agreement. Woori Financial and KDIC have signed a basic stock transfer agreement concerning the 1.23% stake and agreed to decide on specific details such as the timing and method of sale by the end of next year. Once the sale of the remaining shares is completed, the 25-year privatization process will be finalized, and all public funds invested in Woori Financial can be fully recovered.

What is noteworthy is that Woori Financial decided to purchase KDIC’s remaining shares as treasury stock. In other words, the buyer of the shares is predetermined. This is a solution to the overhang problem that can occur during large-scale share sales. If a large volume of shares is dumped into the market at once, the stock price may fall, which raises concerns for both KDIC, which must maximize fund recovery, and the stock market. In fact, after KDIC’s block sale last year, Woori Financial’s stock price fell by an average of 6.9%.

Many evaluations suggest that KDIC’s decision to sell the remaining shares of Woori Financial was influenced by Chairman Lim’s personal skill. A financial industry insider said, “I think this is a case where Chairman Lim’s personal ability stood out,” adding, “Because Chairman Lim proposed it, KDIC and the Public Fund Management Committee likely reviewed it actively.” Another industry insider also stated, “Chairman Lim Jong-ryong had a deep understanding of Woori Financial since his public service days,” and “His role was probably crucial in this agreement, which allows both KDIC and Woori Financial to achieve a win-win outcome.”

In the market, there are opinions that this method of selling Woori Financial’s remaining shares could be partially applied to cases like Seoul Guarantee Insurance. Seoul Guarantee is currently recovering public funds through an initial public offering (IPO) and is also facing overhang concerns. SGI, which has received 10.2 trillion won in public funds, is a major shareholder with 93.85% stake held by KDIC, and its recovery rate so far is 45%.

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