Innocean Worldwide prices $307m Korean IPO

Hyundai Motor's advertising agency shrugs off poor market conditions to price its initial public offering near the middle of its targeted range.

Innocean Worldwide, the in-house advertising agency of Hyundai Motor Group, priced its initial public offering near the middle of its targeted range on Monday, overcoming hostile market conditions both at home and abroad to raise $307 million.

The Korean group and two of its top shareholders sold roughly 5 million shares at W68,000 per unit, against an indicative price range of W64,000 to W71,000, a source close to the deal told FinanceAsia. At that price, Innocean is valued at 18.6 times annualised first-quarter earnings, the source said.

The IPO was concluded against a very shaky backdrop after Greek voters rejected creditor demands at the weekend, raising the risk of a messy Greek eurozone exit, and after 21 of China’s largest securities firms agreed to jointly invest Rmb120 billion ($19.3 billion) in a stabilisation fund to help bolster plummeting A-share markets.

Korea, meanwhile, continues to be plagued by a recent outbreak of the deadly Middle East Respiratory Syndrome virus, which has so far killed 33 people. The bellwether Kopsi Index has dropped by 4% since May 20.

Of the 5 million shares sold by Innocean, 20% were primary and 60% secondary. The secondary tranche consisted of shares held by Hyundai Motors chairman Chung Mong Koo and his daughter Chung Sung-yi. They pared down their combined stake from about 60% to 30% post-deal to avoid potential government fines on inter-company transactions, which came into effect earlier this year.

The book was covered multiple times across the price range, especially the domestic tranche, which was oversubscribed 100 times, the source close to the deal said. However, only 60% of the deal went to domestic investors, with the rest allocated to international investors, a mix of long-only institutional investors and hedge funds, the source said.

Citi, Deutsche Bank, Woori Bank and Daewoo Securities oversaw the IPO.

Busy so far

Despite a fairly uninspired pipeline, Korea has had a decent amount of equity capital markets activity so far this year.

Korean ECM volumes in the year-do-date period stand at $5.6 billion via 43 deals compared with $4.3 billion via 45 deals in the period of 2014, Dealogic data shows.

Mirae Asset Life Insurance, Korea’s fifth-largest life insurer, raised $306.5 million in an IPO less than two weeks ago, although shares wound up pricing below the marketed range.

In May, two Samsung Life shareholders took advantage of a sharp share price rally to divest a $601 million stake in Korea’s largest insurance company by assets.

In March, the Korea Deposit Insurance Corporation completed a long-anticipated 2% stock divestment from Hanwha Life, raising W133.4 billion ($118 million) in the process. In addition to removing the price overhang from Hanwha Life’s stock, the deal was welcomed by the market at the time, as block trades were sparse in the region due to the blackout period.

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