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| Lotte is the latest chaebol seeking a market debut of its key affiliate in the second half of the year as part of possible efforts to accelerate corporate restructuring. Korea Times file |
By Yi Whan-woo
Lotte, Hyundai Motor, Hanwha and Hyundai Heavy Industries Group are aiming for market debuts of their key affiliates in the second half of the year, in what are seen as bids to speed up corporate restructuring.
Although none of the four family-owned conglomerates admitted it, industry sources reckon an initial public offering (IPO) of their respective affiliates ― Lotte Rental, Hyundai Engineering, Hanwha General Chemical and Hyundai Heavy Industries Co. ― will help the chairpeople or heirs apparent to raise cash by selling off stakes after the IPOs and solidify their management control.
The planned listings, which have not been observed among chaebol for years, are anticipated to enliven the IPO market as each of the four affiliates is valued at trillions of won.
According to the investment banking industry, Lotte Rental was the latest to kick off its IPO process.
It filed for a preliminary review by the Korea Exchange, Tuesday, of its share listing plan on the KOSPI.
“The firm may be able to receive approval in August and make its market debut in September at the earliest,” a source said on condition of anonymity.
The country’s largest car rental company’s market share is over 20 percent, with corporate value estimated to be around 2 trillion won ($1.8 billion).
A successful IPO of Lotte Rental may be followed by market debuts of other Lotte affiliates, including Hotel Lotte.
Analysts believe these listings can ultimately help Lotte Chairman Shin Dong-bin simplify Lotte’s corporate structure and tighten his grip.
The web-like structure is believed to have given room for Lotte units in Japan, which are owned by his embittered elder brother Shin Dong-ju, to meddle in management.
Regarding Hyundai Motor, the planned IPO of Hyundai Engineering is viewed as the beginning of a master plan for Hyundai Motor Group Chairman Chung Euisun to reach the top of the governance hierarchy after succeeding his father, honorary Chairman Chung Mong-koo, in October 2020.
The unlisted monetary value of Hyundai Engineering, a plant construction firm, is estimated at more than 10 trillion won in the over-the-counter market.
Its IPO will be finalized by the third quarter at the earliest.
The junior Chung holds an 11.7 percent stake in the company, making him the second-largest shareholder after the group’s construction arm Hyundai E&C which owns a 38.6 percent stake.
The chairman will be able to secure more than 800 billion won by selling off his stake after the IPO.
With the proceeds from the sale, he can secure Hyundai Mobis shares, which market observers cite as the key to maintaining management control over the conglomerate.
The planned IPO of Hanwha General Chemical, possibly by August, is seen as a step to facilitate the hereditary succession of Hanwha Chairman Kim Seung-youn’s three sons, including Kim Dong-kwan, vice president of Hanwha Solutions.
Hanwha Solutions is wholly owned by the chairman’s three sons. It controls Hanwha Energy, which in turn holds the biggest 39.1 percent stake in Hanwha General Chemical.
Under this shareholding structure, raising Hanwha General Chemical’s market value through an IPO can increase the holdings of the three heirs.
Hyundai Heavy Industries Group seeks an IPO of unlisted affiliate Hyundai Heavy Industries Co. within 2021.
The business group is planning to raise 1 trillion won, which analysts deem can be used to accelerate third-generation management succession for Chung Ki-sun, the vice president of Hyundai Heavy Industries Co. and also the eldest son of Hyundai Heavy Industries Group Chairman Chung Mong-joon and grandson of late Hyundai founder Chung Ju-yung.
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