SEOUL, July 25 (Reuters) - South Korea’s KB Financial Group has decided not to bid for a 6 trillion won ($5.23 billion) controlling stake in Woori Finance Holdings , a source with direct knowledge of the plan said on Wednesday, throwing into doubt the government’s third attempt to privatise Woori just two days before initial bids are due.
Authorities are under pressure to dispose of the stake before the current president, Lee Myung-bak, ends his term in office early next year. They face an uphill struggle with few domestic firms boasting the capacity for the deal and U.S. fund Lone Star’s years-long battle to offload a stake in Korea Exchange Bank still fresh in foreign investors’ minds.
Since the South Korean government put up its 57 percent stake in the country’s biggest financial holding company by assets, few bidders have emerged. KB was seen by some analysts as the most likely bidder and recently had been considering a bid, a KB official previously said.
But opposition by KB affiliate Kookmin Bank’s employee union as well as ruling party politicians calling to postpone Woori’s privatisation to the next administration caused concern among KB’s board members, Yonhap wire service and other local media reported on Wednesday.
No clear bidders have emerged in the latest sale, but an official at local private equity fund IMM previously said it may invest in Woori while a spokesman for Kyobo Life said it was considering a bid.
Local media reports have also named private equity fund MBK Partners as a possible bidder. The fund was the sole bidder for Woori last year when the sale was halted by South Korea’s Financial Services Commission due to a lack of interest.
The sale of Woori is the lynchpin of Lee’s drive to recoup billions of dollars in taxpayer money spent to rescue the financial sector in the wake of the Asian financial crisis in the late 1990s.
($1 = 1,146.1750 Korean won)
Reporting By Joyce Lee; Editing by Matt Driskill