KDB Financial seeks 2012 IPO

Yet analysts doubt on the marketability of KDB shares in the current environment.

KDB Financial Group Inc., South Korea’s largest state-run banking group, aims to complete an initial public offering this year as part of the government’s plan to privatize the firm, Chairman Kang Man Soo said.

“An IPO appears to be the most practical way for KDB to privatize this year,” Kang told reporters Thursday. The Seoul- based company would proceed with the sale after the government determines the details, he said. “KDB’s price can be set in the market through the IPO and the government may be able to sell additional stakes accordingly.”

Reducing the government’s stakes in KDB and Woori Finance Holdings Co. were among pledges made by President Lee Myung Bak in 2007 to make the nation’s banks stronger. His administration last year failed in its second attempt to sell Woori, and demand for KDB shares may be muted amid the global equities rout as Europe’s sovereign debt crisis damps economic growth.

“I don’t know if investors would be keen on buying KDB shares in the current market environment,” said Heo Pil Seok, chief executive officer of Midas International Asset Management Ltd., which oversees about $1 billion in assets. “The appetite for banking IPOs isn’t so strong with tightened regulations for the sector and lingering concerns about Europe’s debt crisis.”

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’s talks with HSBC Holdings Plc to buy the U.K. bank’s Korean branches are progressing “well,” Kang said at the press briefing in Seoul today. The discussions will conclude “soon,” he said, without elaborating.

View the full story in Business Week.

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Tags: KDB Financial IPO, Korea IPO, 2012 IPO