Hyundai Securities stake up for sale again

Hyundai Securities stake up for sale again

Hyundai Securities is being put up for sale just four months after a deal to sell a controlling stake in the brokerage arm of Hyundai Group fell through.

The stake sale, announced Wednesday, is part of the parent group’s self-help plan to ease a liquidity crunch at its flagship unit Hyundai Merchant Marine. It hopes to speed up the auction process and complete the sale by the end of March, the company said.

“A notice has been issued Wednesday for the sale. Interested parties should submit letters of intent by Feb. 29,” said EY Han Young, the lead adviser for the sale.

Up for grabs is a combined 22.56 percent stake in Hyundai Securities, valued at over 305 billion won ($253 million) based on Thursday’s share price. Hyundai Merchant has a stake of 22.43 percent and the rest of the stake being sold is owned by the group’s chairwoman Hyun Jeong-un and her family. With management premiums, the price could go higher than the current market value, experts said.

In last year’s botched deal, Japanese financial services group Orix had offered to pay 647 billion won for the stake. Hyundai Securities’ stock price on Thursday was 5,720 won, about 30 percent lower than the level recorded when the deal was inked.

“Hyundai Securities is an attractive target in terms of price,” said Seo Bo-ick, an analyst at Eugene Investment & Securities, pointing that the controlling 43 percent stake in KDB Daewoo Securities had a price tag of over 2.3 trillion won last year. KDB Daewoo is ranked second, with 4.3 trillion won in assets, while Hyundai Securities is in fifth place, with 3.2 trillion won in assets.

“But investors must bear in mind that its sale has had difficulties in the past over several issues,” Seo noted. The deal with Orix fell through amid speculations that Hyundai Group was seeking to just temporarily “park” the brokerage in the Japanese firm through a secret arrangement to repurchase the stake in the future.

Deal watchers say the reopened sale will likely draw major Korean financial groups and private equity funds as bidders.

According to them, potential bidders include KB Financial Group, Korea Investment Holdings and Korean private equity firm Pinestreet. Orix may bid again, a local report said, citing an unnamed company official.

KB Financial and Korea Investment Holdings, which both run their own brokerage houses, are seeking expansion in the securities sector through M&As. Both bid for control of KDB Daewoo late last year.

Pinestreet was beaten by Orix in the previous Hyundai Securities sale.

KB Financial said in a filing Thursday that there was “nothing that is progressing or has been decided” regarding the Hyundai Securities stake sale.

Meanwhile, Hyundai Securities reported Thursday that its net profit in 2015 had jumped 646.3 percent to 279 billion won. Revenues rose 61 percent to 4.2 trillion won, while operating profits soared 648.5 percent to 297 billion won.


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