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UPDATE 1-S. Korea's KDIC plans $235 mln KEPCO stake sale-source

* KDIC offers KEPCO shares at discount of zero to 3.9 pct to mkt price

* Deal could grow to almost $800 mln if KDIC sells entire stake

(Adds details of the deal, KDIC stake sale plans, background)

By Elzio Barreto

HONG KONG, Oct 9 (Reuters) - State-run Korea Deposit Insurance Corp (KDIC) launched on Tuesday an up to $235 million shares selldown in Korea Electric Power Corp (KEPCO) , a source with direct knowledge of the plan said.

KDIC , through its Korea Resolution & Collection Corp. unit, is offering 9.67 million KEPCO shares in a range of 25,900-26,950 Korean won each, added the source, who was not authorized to speak publicly on the matter and thus did not want to be identified.

The deal could grow to almost $800 million, Thomson Reuters publication IFR reported, if KDIC sells its entire 5 percent stake in the utility.

KDIC had been considering selling it for a while to recoup funds that went into normalizing banks teetering from the Asian financial crisis, a KDIC official told Reuters on Tuesday. The state-run company got the stake when Newbridge Capital acquired in 1999 what is now Standard Chartered Korea.

In late September, a government committee overseeing the recouping of public funds approved advising banks' request to sell the KDIC stake piecemeal - by chunks of 1.5 percent or more.

Advisers previously only had the mandate to sell the entire stake or nothing, and the market was seen less likely to digest the entire stake at once, a source with direct knowledge of the committee proceedings previously told Reuters.

Citigroup , Deutsche Bank , Shinhan Investment Corp and Woori Investment & Securities were hired as joint bookrunners on the deal.

(Additional reporting by Joyce Lee in SEOUL and Daniel Stanton in Singapore; Editing by Muralikumar Anantharaman)

((elzio.barreto@thomsonreuters.com)(852)(2843-1608)(Reuters

Messaging: elzio.barreto.thomsonreuters.com@reuters.net))

Keywords: KDIC KEPCO/SELLDOWN