Kia sells Hyundai Hysco stake

Car manufacturer divests stake at all time high.

Kia Motor sold a 10% stake in Hyundai Hysco yesterday (August 3) raising $121 million via Credit Suisse First Boston. The car manufacturer sold 8.14 million shares at Won15,100, which represented a 5% discount to the stock's Won15,900 close.

As a result of the sale its stake will drop to 15%.

The discount was fairly steep for such a small deal, but understandable in the context of the stock's massive run-up. Year-to-date, it has risen 109.76% and 288.22% on a one-year basis.

This share price appreciation has been attributed to the halo effect of sister companies Hyundai Motor and Kia Motor. Hyundai Hysco is a re-roller of CR coils and sells over half of its capacity to the two car manufacturers.

Last week it released second quarter figures, which showed that net income rose 19% year-on-year to Won30.8 billion ($30 million).

The order book for the deal is said to have been fairly concentrated with participation by just over 15 accounts. At closure, it is said to have been over one-and-a-half times covered.

About 60% of the deal was placed domestically and the remaining 40% internationally.

Thanks to its share price run-up, Hyundai Hysco now has a market cap of $1.2 billion, but is not yet covered by any international houses.

At its current share price it is said to be trading at 11 times forward earnings.

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