Hyundai Mipo exits KCC with $121m clean-up sale

The transaction extends the recent revival in Korean deal flow after a particularly strong first quarter and provides some solace after the Hotel Lotte IPO was pulled.

Hyundai Mipo Dockyard raised W142.1 billion ($121 million) through a clean-up trade in chemical and auto parts manufacturer KCC Corp on Tuesday, extending Korea's strong run of secondary share sales so far this year.

Driven by a number of follow-on offerings from affiliates of Samsung Group as well as Korea Aerospace Industries, South Korea has been a hot spot for Asian equity capital markets this year, especially in the first quarter when deal volume reached a 10-year high of $3.9 billion, according to Dealogic. 

Attention in the past two months has shifted to Southeast Asia, where a number of transactions were completed after a prolonged drought last year. They include the $470 million listing in Singapore of Manulife US Reit and CVC Capital Partners’s $227 million block trade of shares in Indonesia’s Matahari Department Store.

Yet Asian deal flow has returned to Korea towards the end of the second quarter. Japan’s Nippon Steel raised $139 million from the sale of shares in state-owned steel maker POSCO last week, while Standard Chartered cashed in $95 million through the sale of shares in Innocean Worldwide.

As such, Hyundai Mipo Dockyard’s KCC exit is the third transaction within the last fortnight. That has perhaps provided some relief to Korean investment bankers after Hotel Lotte, which was preparing for the country’s largest ever initial public offering, decided to pull the transaction following investigations related to bribery and embezzlement allegations.


Tuesday’s Reg S only deal, which was conducted after the market close, saw Hyundai Mipo Dockyard offload all of its 397,000 shares in KCC at W358,000 per share, representing a 5.5% discount to the stock’s W379,000 Tuesday close, according to a source familiar with the situation.

The shares equated to 3.7% of KCC's outstanding share capital.

Credit Suisse, sole bookrunner for the transaction, guided investors to bid within an indicative range of W356,500 to W371,000 per share, or a discount range of 2.1% to 5.9%.

The timing of the transaction was less than ideal for the seller, with KCC shares trading near its 52-week low of W348,500. But it has effectively simplified a network of circular shareholding between Hyundai Mipo Dockyard, KCC, and Hyundai Heavy Industries.

After the transaction KCC continues to own 7.01% of Hyundai Heavy Industries, which is the majority shareholder of Hyundai Mipo Dockyard with a 43% interest.

Hyundai Mipo Dockyard’s sale of KCC was part of the restructuring programme of Hyundai Heavy Industries, which announced last month that it is considering selling some of its non-shipbuilding business.

Apart from KCC Corp, Hyundai Heavy Industries also contemplates trimming its stake in Hyundai Motor as well as unlisted finance subsidiaries Hi Investment & Securities and Hi Asset Management.

According to local reports, Hyundai Heavy Industries has submitted to its main creditor bank KEB Hana a restructuring plan that includes laying off roughly 10% of its 3,000 staff.

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