South Korea's Innocean raises $404m in IPO

A logo of Hyundai Motor is seen on a glass door at its branch in Seoul.
A logo of Hyundai Motor is seen on a glass door at its branch in Seoul. PHOTO: AFP

SEOUL • Innocean Worldwide Inc, an advertising affiliate of Hyundai Motor, said its initial public offering raised US$300 million (S$403.8 million), becoming South Korea's second-biggest IPO of the year.

Some 60 per cent of the share sale came from shareholder Chung Eui Sun, the heir apparent of Hyundai Motor Group, and his sister as the firm sought to comply with new anti-trust regulations by slashing the family's combined holding to just under 30 per cent from 50 per cent.

New laws that went into effect this year stipulate that South Korean firms in which family ownership exceeds 30 per cent will be fined if they make "unfair profits" from deals with other affiliate firms.

The IPO was priced at 68,000 won a share, around the middle of an indicative range of 64,000 won to 71,000 won per share, valuing the company at around 1.36 trillion won (S$1.6 billion). It will make its debut on July 17. The rest of the funds raised will go to Innocean, which is looking to acquire other companies to diversify its client base, its chief financial officer Yoon Seok Hun told reporters last month.

Innocean, the country's second-largest advertising agency after Samsung Group's Cheil Worldwide Inc, garnered about 70 per cent of its revenues last year from Hyundai Motor and sister firm Kia Motors Corp. It had an operating margin of 11.2 per cent in 2014, compared to Cheil's 4.8 per cent. But its global advertising billing fell 7 per cent over two years to 3.61 trillion won last year, as Hyundai and Kia lost ground to Japanese rivals which gained from a weaker yen.

The new anti-trust rules come amid increased scrutiny of family shareholdings in South Korea's massive conglomerates and greater calls for the interests of other shareholders to be protected. Hyundai Motor said this year it will establish a committee to represent shareholder interests when the board makes key decisions. REUTERS

A version of this article appeared in the print edition of The Straits Times on July 07, 2015, with the headline 'South Korea's Innocean raises $404m in IPO'. Print Edition | Subscribe