Goldman raises $633M in Kookmin sale

Staff and wires

SEOUL, South Korea -- U.S. investment bank Goldman Sachs has raised a bigger than expected $633.6 million through the sale of part of its stake in South Korea's biggest consumer bank Kookmin Bank.

Goldman Sachs originally planned to sell 11 million American Depositary Receipts, but Kookmin Bank said Wednesday it issued 13.2 million ADRs at $48 each, for a total of $633.6 million.

The ADRs were based on shares held by Goldman Sachs. Each ADR is equivalent to one ordinary share.

Before the ADR sale, Goldman Sachs held a 6.82 percent stake in Kookmin Bank, making it the second largest shareholder behind the Korean government.

Reuters news agency reported the $48 issue is equivalent to 59,232 won, a slight discount to Tuesday's closing price in Seoul for Kookmin's shares of 60,100 won.

Shares higher

By midday Wednesday in Korea, Kookmin shares were 300 won or half a percent higher to 60,400 won, after going as high as 62,200. The benchmark Kospi index is down sharply, off 2.67 percent to 787.76.

Buying into Kookmin after Asia's 1997-98 financial crisis has proved an excellent bet for Goldman Sachs, which paid $500 million for its stake in 1999.

Its holding is now worth three times that.

Kookmin has spearheaded banking restructuring and merged with South Korea's biggest mortgage lender H&CB last year to create the country's largest lender with 194 trillion won in total assets.

It has since become one of the most popular South Korean stocks among overseas investors, who hold a combined stake of 72.1 percent.

Taking advantage of a 50 percent price jump in the past six months, Goldman converted some of its stake into ADRs to list them on the New York Stock Exchange.

After the sale, Goldman holds a 2.67 percent stake in Kookmin, plus $200 million in convertible bonds which could bring its interest up to 5.81 percent if converted into stocks.