Lotte unit to file likely largest Korea IPO in recent years

SEOUL (BLOOMBERG) - Hotel Lotte Co., a duty-free sales unit of retail conglomerate Lotte Group, filed an application for what could be the largest South Korean largest public offering in recent years.

Hotel Lotte submitted the application on Monday, the Korea Stock Exchange said in an e-mailed statement. Lotte Group didn't comment on the size or timing of the offering in an earlier statement on the filing. The exchange typically takes 20 to 45 business days to process such applications.

While financial terms weren't provided, MoneyToday reported in October that Hotel Lotte is seeking to sell a 35 per cent stake for 7 trillion won (S$835 billion). That indicates a total valuation of 20 trillion won, which would be more than 100 times the profits that Hotel Lotte reported for 2014. By comparison, Hotel Shilla Co., which also operates both duty-free shops as well as hotels in South Korea, trades at 44 times 2014 earnings.

The last time a Korean initial public offering exceeded US$2 billion was in 2010, when Samsung Life Insurance Co. raised US$4.3 billion, according to data compiled by Bloomberg.

The public offer will come amid a power struggle between conglomerate Lotte Group Chairman Shin Dong Bin and his elder brother. Shin in September said the hotel unit will be listed by the first half of next year as part of his promise to improve corporate governance and transparency in the company, started by his father in Japan in 1948.

The listing in South Korea will help reduce Hotel Lotte stakes held by the group's Japanese affiliates, a complicated relationship that has led to the company being lambasted by Korean politicians.