South Korea’s state-run Industrial Bank of Korea (IBK) is putting out its 2 percent stakes in nation’s major tobacco manufacturer KT&G that is worth about 330 billion won ($289 million) in the wake of the government’s policy to bolster the role of IBK as a state-funded bank.

According to government and financial industry sources on Friday, IBK is in discussion with Financial Services Commission and its major shareholder Ministry of Strategy and Finance on selling 2 percent stakes of its KT&G Corp. that is valued at about 280 billion won ($245 million) on book, or about 330 billion won based on the closing price at 124,000 won per share on Friday. IBK currently holds 6.93 percent stakes (9,510,485 shares) in the nation’s major tobacco manufacturer KT&G. “The exact portion of shares to be put out on sale would vary upon market conditions in the future,” said an unnamed IBK official.

IBK has acquired KT&G shares in Oct. 1998 following the Asian Financial Crisis as the state’s measure to support the troubled tobacco producer. The state-run National Pension Service (NPS) currently stands as the largest shareholder of KT&G followed by the United States-based First Eagle Investment Management LLC. “The state-funded banks such as IBK and Export-Import Bank of Korea have to sell their subsidiaries and companies they have stakes in non-financial sector consecutively within three years upon the plan that the government announced in November last year to boost the roles held by IBK and Korea Development Bank,” explained an unnamed financial industry source. “IBK reportedly plans to put out KT&G shares, which is the only company that it has to sell shares of, on sale gradually considering the size of the firm,” added the source.

In addition, KEB’s decision to put KT&G shares on sale includes its bid to raise funds. The bank set up a venture-finance team last year and aims to expand both direct and indirect investments to over 480.0 billion won in 2018 from 232.5 billion won in 2015.

By Chung Seok-woo, Lee Seung-yoon

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