MSPEA-backed Hyundai Rotem to raise up to $575m in IPO
Hyundai Rotem, a South Korean train maker backed by Morgan Stanley Private Equity Asia (MSPEA), intends to raise as much as KRW622.4 billion ($575 million) in what is set to be the country's biggest IPO so far this year.
The company plans to sell 21 million new shares and 6 million existing shares priced between KRW17,000 and KRW23,000 apiece. The final price will be announced on October 21.
According to Reuters, the public offering - which was approved by South Korean regulators in June - has progressed slowly because of labor disputes during annual wage negotiations.
If the valuation target is met, this would be Korea's largest PE-backed IPO since Korea Aerospace Industries - which counted IMM Private Equity and Mirae Asset Global Investments among its shareholders - raised $526 million back in June 2011.
Hyundai Motor owns 57.6% of Rotem, with MSPEA holding the remainder. The PE firm invested in two tranches in 2006, KRW85.3 billion for a 20.7% stake and then KRW76.3 billion for a further 21.7%. Rotem, which controls over 90% of the domestic train market and around 2% of the global market, recorded a net profit of KRW78.4 billion on sales of KRW3.1 trillion last year.
According to AVCJ Research, there was only one private equity-backed IPO on the Korea Stock Exchange last year, with AJ Rent A Car raising $34 million. This represented a considerable drop on the $1.17 billion generated by five offerings in 2011. The situation reflects a weak appetite for Korean IPOs in general in the last 18 months.
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