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What, Goldman Woori? GS Jumps in With a Bid

(Reuters) – U.S. investment bank Goldman Sachs Group Inc and Canada Pension Plan Investment Board have decided to join private equity firm MBK Partners in a bid for Woori Finance Holdings Co Ltd, the country head of MBK Partners said.

Yoon Jong-ha told Reuters in an interview that in the race for South Korea’s biggest banking privatization deal, MBK Partners had completed fundraising and would submit a preliminary bid by the Wednesday deadline.

However, recent plunges on world stock markets have left the government’s up to $6 billion Woori stake auction in doubt again as the two other potential buyers have yet to decide whether to bid.
South Korea’s effort to claw back public funds injected into Woori after the Asian Financial Crisis in late 1990s was hampered late last year due to lack of investor interest.

Woori shares have recently fallen to the lowest level in nearly two years as stock markets sank on fears of weak global growth.

“As stock prices recently tumbled, funding from domestic investors fell short of our expectations,” Min Euoo-sung, chairman of TStone Partners, told Reuters on Tuesday.

TStone, which along with Vogo Fund and MBK Partners filed initial offers for the Woori stake, will decide whether to make a final bid on Wednesday, Min said.

Vogo Fund is considering whether to pull out of the sale process after failing to find a strategic investor, according to media reports. Vogo was not available to comment.

Commenting on the recent stock slides, Yoon of MBK Partners added: “We can see that stock prices have fallen sharply, but this may not relate to the firm’s fundamental value.”

The three homegrown private equity firms have been given a minimum requirement to buy a 30 percent Woori stake from the government’s total 57 percent stake being auctioned.

“We are eyeing above a 30 percent stake as the guideline states,” the co-founder of the Korean buyout fund said.

Yoon declined to give further details on investors for Woori bid, but described Goldman’s investment as “sizeable.”

“We are looking at Woori in a mid to long-term timeframe…We have done our best to win,” Yoon said.

A source with direct knowledge of the deal told Reuters earlier that Goldman would participate with about 600 billion won ($556 million) and that local lenders Korean Federation of Community Credit Cooperatives and Busan Bank had also teamed up with MBK.

Some media reports and others have criticized private equity firms for involvement in the privatization process and raised concerns around their exit strategies.

U.S. private equity fund Lone Star has been hit with a series of lawsuits, bad press and aborted sale attempts in relation to its years-long stakeholding in Korea Exchange Bank.

The former co-head of Korea for Carlyle Asia Partners said he had taken the Lone Star saga into account.

“We are different from Lone Star. Because we are a Korean fund, we must continue to work here.”

($1=1079.200 won)

(By Ju-min Park and Lee Chang-ho; editing by Chris Lewis, David Chance, Matt Driskill and Erica Billingham)