Eugene Private Equity (PE), a major shareholder in Woori Financial Group, has sold nearly half of its stake, marking a turning point in the decade-long governance structure dominated by major shareholders. With Woori Financial's stock price significantly higher than at the time of its privatization and consistent dividends, attention is now on whether other major shareholders, including Kiwoom Securities, Korea Investment & Securities, and Fubon Life, will also consider selling their stakes.
According to financial industry sources, Eugene PE recently sold 14 million shares of Woori Financial through an off-hours block deal. The sale price was set at 33,189 won per share, totaling approximately 465 billion won. Following this transaction, Eugene PE's stake has decreased from 3.97% to 2.07%.
Eugene PE acquired a 4% stake during Woori Financial's full privatization in 2021. Since then, it has recouped a significant portion of its investment through dividends and refinancing, and this block deal has provided a substantial cash influx. Analysts suggest that Eugene PE has entered a phase of actively recovering its investment.
Market observers are noting the potential for Eugene PE's sale to trigger exits by other major shareholders. Currently, Fubon Life holds a 3.97% stake, Korea Investment & Securities has 3.77%, and Kiwoom Securities owns 3.73%.
Kiwoom Securities and Korea Investment & Securities acquired their shares during Woori Bank's privatization in 2016 and have held them for nearly a decade. The stock price, which was in the low 10,000 won range at that time, has now risen to the 30,000 won range, resulting in significant capital gains. When combined with the dividends received, their actual investment returns are even greater.
A key factor is that the sale of shares by major shareholders coincides with a board restructuring scheduled for March next year. The terms of outside directors recommended by major shareholders will expire around the time of the regular shareholders' meeting. Woori Financial is expected to reassess whether to maintain the right to recommend outside directors, considering the current shareholding structure and the long-term intentions of major shareholders. If other major shareholders follow Eugene PE in reducing their stakes, the justification for reappointing existing outside directors may weaken.
The major shareholder structure at Woori Financial began in 2016 when the Korea Deposit Insurance Corporation sold its holdings to various investors. This arrangement was designed to ensure management stability and oversight by granting outside director recommendation rights to shareholders with significant long-term holdings in the absence of a specific major shareholder.
However, since Woori Financial's full privatization, the composition of its shareholders has changed. Recently, foreign ownership in Woori Financial has surpassed 50% for the first time. While still lower than KB, Shinhan, and Hana Financial, further sales of major shareholder stakes could accelerate the shift toward a more diversified ownership structure dominated by foreign and institutional investors.
The weakening of the major shareholder structure does not necessarily imply an improvement in governance. While the influence of specific shareholders on the board may diminish, the oversight function of long-term responsible shareholders could also weaken. The decision on whether to sell additional stakes following Eugene PE's move and the appointment of outside directors next year will likely determine the future of Woori Financial's major shareholder structure, which has persisted for a decade.
* This article has been translated by AI.
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