Samsung’s ownership transfer to speed up with IPO

June 9, 2014 Leave a comment

Samsung’s ownership transfer to speed up with IPO

SEOUL, June 3 (Xinhua) — Ownership transfer of Samsung Group, South Korea’s largest conglomerate, is expected to speed up as plans to list its de facto holding company will help the heir apparent secure funds to take control of the group’s affiliates.

Samsung Everland, the group’s de facto holding company, held a board of directors’ meeting Tuesday, deciding to make the amusement park operator go public by the first quarter of next year.

The initial public offering (IPO) plan came as Samsung Electronics chairman Lee Kun-hee, 72, the group’s de facto chief, has been in the hospital since May 10 for an acute myocardial infarction.

Chairman Lee has governed all the affiliates of Samsung Group in a way that he and Samsung Everland controls Samsung Life Insurance, which controls the group’s finance-related affiliates as well as Samsung Electronics that controls technology-related affiliates.

Lee’s only son Jae-yong, his heir apparent, has a 25.1 percent stake in the de facto holding company, with his two daughters holding an 8.37 percent stake respectively. Lee has a 3.72 percent stake.

The total value of stakes owned by Lee family was estimated at more than 2 trillion won (1.95 billion U.S. dollars) based on a price of 1.82 million won per share that was applied to the block sale in 2011.

The IPO will speed up the management succession from the chairman to his son Jae-yong, Samsung Electronics’ vice chairman, helping him secure funds necessary to buy stakes in the group’s affiliates and pay inheritance taxes.

In addition, Samsung SDS, the group’s information technology unit, announced a plan last month to go public by the end of this year.

Samsung Electronics was the largest shareholder of Samsung SDS with a 22.58 percent stake as of the end of last year, followed by the group’s construction and trading unit Samsung C&T with 17.08 percent.

Jae-yong had an 11.25 percent stake in Samsung SDS. The IPO was expected to help the heir apparent earn more than 1 trillion won. Lee’s two daughters also held a 3.9 percent stake respectively.

 

Samsung Everland, the de facto holding company of Samsung Group, will go public in the first quarter of next year.
Samsung Everland held a meeting of board of directors Tuesday and decided to push for the initial public offering (IPO).
This heralds that the push for handing over control of Samsung Group to Lee Jae-yong, Samsung Everland’s biggest shareholder and Samsung Electronics’ vice chairman, will accelerate.
Besides, Samsung Group’s efforts to switch to a holding company structure will likely gather pace.
Samsung Group’s chairman Lee Kun-hee owns a 3.72 percent stake in Samsung Everland; his eldest son and vice chairman Lee Jae-yong 25.1 percent; eldest daughter and president of Hotel Shilla Lee Boo-jin 8.37 percent and; second daughter and president of Samsung Everland’s fashion business Lee Seo-hyun 8.37 percent.
Vice chairman Lee and others are expected to rake in hefty gains if the IPO elevates the value of Samsung Everland shares.
These gains are forecast to be used to buy stakes required for inheritance of management rights and finance the payment of inheritance tax.
Samsung Group has formed a cross-share holdings structure consisting of Samsung Everland, Samsung Life Insurance, Samsung Electronics, Samsung SDI and Samsung C&T. Samsung Everland is at the peak of the cross-share holdings.
“With the IPO, we plan to secure competitiveness of businesses early on, which were reorganized last year, and become a global fashion and service company,” said Samsung Everland.

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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