Bloomberg News

KDB Financial Picks Goldman, Samsung Among Seven Preferred IPO Managers

March 05, 2012

KDB Financial Group Inc. (KDBGRPZ) hired seven brokerages, including Goldman Sachs Group Inc. (GS) and Samsung Securities Co., as preferred bidders to arrange its initial public share sale as the government privatizes the company.

KDB, South Korea’s largest state-run banking group, will hold talks with Goldman Sachs and Samsung Securities to become lead arrangers, the Seoul-based company said in an e-mailed statement today. KDB plans to hold the IPO by October, it said.

South Korean President Lee Myung Bak’s 2007 campaign pledges to privatize and deregulate financial firms were hampered last year in a second failed attempt to sell Woori Finance Holdings Co. (053000) due to lack of investor interest. Demand for KDB shares will hinge on pricing amid uncertainties in the global economy, according to KTB Asset Management Co.

“Even after gains in shares this year, many local banks are still trading below their book values,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion. “For a state lender like KDB, the government will own the bulk of the bank even after the IPO and is set to hold sway on its key policies, which should be a discount factor compared with other banks.”

The average price to book ratio of South Korea’s big four publicly traded financial holding groups -- KB Financial Group Inc., Woori Finance, Shinhan Financial Group Co. and Hana Financial Group Inc. -- is 0.78, according to data compiled by Bloomberg. The KRX Banks Sector Index (KRXBANK), comprised of 10 South Korean banks, has jumped 12 percent this year, following a 31 percent drop in 2011.

Preferred Bidders List

Citigroup Inc. (C), UBS AG (UBSN), Tong Yang Securities Inc., Korea Investment & Securities Co. and Hyundai Securities Co. (003450), were also named as preferred bidders to help arrange the share sale, according to today’s statement.

Finance Minister Bahk Jae Wan said last year the nation plans to sell part of its stake in KDB in 2012. The government is required to offload an unspecified number of shares in the company by May 2014.

KDB may sell more than 10 percent of the company through the offering if market conditions are favorable, Chairman Kang Man Soo said on Feb. 22. The 10 percent is a minimum sale requirement under South Korea’s IPO rules.

If KDB sells a 10 percent stake at book value, that could make the offering worth about 2 trillion won ($1.79 billion). That would be the biggest IPO in Korea since Samsung Life Insurance Co. (032830) raised 4.89 trillion won in 2010, according to an estimate by Kyobo Securities Co.

KDB had 176 trillion won of assets as of September including 23 trillion won of equity, according to company data posted on its website. Profit rose 50 percent 1.06 trillion won in the nine-month period ended September from a year earlier as credit costs fell, the data show.

To contact the reporters on this story: Seonjin Cha in Seoul at scha2@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net; Darren Boey at dboey@bloomberg.net


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