MSPEA set for partial exit as Hyundai Rotem IPO raises $585m

Rotem is selling 27.06 million shares - includiing 6 million shares owned by MSPEA - at KRW23,000 apiece, the top end of its KRW17,000-23,000 per share indicative range.

Korean IPOs have struggled against weak investor sentiment in the last couple of years with no offerings of significant size since 2011. The string of aborted or delayed listing plans include POSCO Specialty Steel, which ended up raising KRW250 billion from IMM Private Equity and Mirae Asset Management in August as parent company POSCO looked for ways to service its debts.

Rotem, however, appears to have timed its offering well - the Korea Composite Stock Price Index is currently trading at around 2,050 points, up nearly 5% on a one-year basis and at its highest level since July 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%. After the listing, MSPEA's interest will drop to 24.8%.

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. Kim Young-gon, Rotem's CFO, said the proceeds of the offering will be used to improve the company's financial structure by paying down debt as well as investing in global expansion.

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