Morgan Stanley-backed Hyundai Rotem gets green light for IPO
Hyundai Rotem, a South Korean railway vehicle manufacturer backed by Morgan Stanley Private Equity Asia (MSPEA), has received approval to list on the Korea Stock Exchange. It will likely be the country’s largest share offering so far this year and the first by a PE-invested company on its leading bourse.
The number of shares to be sold and the price range have yet to be disclosed, but according to media reports Rotem is expected to raise at least KRW300 billion ($269 million). This would make it the largest private equity-backed IPO in Korea since Korea Aerospace Industries, which counted IMM Private Equity and Mirae Asset Global Investments among its shareholders, raised $526 million in June 2011.
Hyundai Motor owns 57.6% of Rotem, with MSPEA holding the remainder. The private equity 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 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.
The smaller cap KOSDAQ bourse has seen more activity, with four VC-backed companies raising $83 million so far this year, after 14 drew $131.9 million in 2012.
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