Cheil Industries IPO may raise up to W1.5 tln

By Kim Eun-jung

SEOUL, Oct. 31 (Yonhap) -- Cheil Industries Inc., the de facto holding company of Samsung Group, said Friday it has applied for an initial public offering, an event scheduled for December that market watchers say is expected to fetch up to 1.5 trillion won (US$1.4 billion), the nation's biggest offering this year.

Cheil Industries said in a regulatory filing that it will sell 15 percent, or 18.7 million, of its shares and issue 10 million new shares at prices ranging between 45,000 won and 53,000 won.

Ahead of the application, Samsung SDI and Samsung Card, affiliates of the larger Samsung Group, said they will sell 4 percent and 5 percent of their stakes in Cheil. KCC, Cheil's second-biggest shareholder, plans to sell 6 percent of its 15 percent stake.

If listed at the top end of the expected price, it would raise about 1.5 trillion won to become the nation's biggest IPO in more than four years. It would give the company a market capitalization of about 7 trillion won. The listing on the Seoul bourse is expected on Dec. 18.

The offering by Cheil, formerly known as Everland Inc., is closely watched by the market as Samsung Group, the country's largest family-run conglomerate, is seen as on its way to a managerial transfer after its chairman, 72-year-old Lee Kun-hee, was hospitalized in May after a heart attack.

His only son, Lee Jae-yong, whose main title is vice president of the group's crown jewel, Samsung Electronics, is the biggest shareholder in Cheil with a 25 percent stake. His two younger sisters each have 8.37 percent stake. Chairman Lee holds 3.72 percent.

Market watchers expect Cheil, at the forefront of the group's complex web of cross-shareholding, will play a key role in the group's transition to a holding company through its arrangement of stakes in key affiliates, including flagship unit Samsung Electronics and Samsung Life Insurance. Samsung has largely been secretive about its plans.

Samsung SDS Co., a key IT affiliate that is currently traded on the over-the-counter market, is also preparing for a debut on the main bourse in early November. With its expected offering price at around 190,000 won, the share sale may raise about 1.2 trillion won, the second largest IPO this year after Cheil Industries.

Calls have been growing for Samsung Group to unwind the circular shareholding structure that allows the owner family to control about 70 affiliates with a total stake of less than 2 percent. The Park Geun-hye administration is also pressuring family-owned conglomerates to adopt holding company structures to improve transparency, offering tax incentives to those who do.

Expectations of an imminent restructuring have recently raised shares of Samsung Electronics and key affiliates, although they announced weak third-quarter performances earlier this week.

The group's heir-apparent, Jae-yong, was reported to be trying to buy stakes in Samsung Life Insurance and Samsung Fire & Marine Insurance Co., raising investor hopes that Samsung would expedite the restructuring.

Samsung Electronics, the world's largest handset maker whose stock price had repeatedly hit rock-bottom earlier this month, bounced back on Tuesday following reports of Jae-yong's move.

Its shares rallied for the third consecutive day Friday to close at 1,244,000 won, jumping 13.6 percent this week. Samsung Insurance soared 8.88 percent and Samsung Securities climbed 3.89 percent this week.

ejkim@yna.co.kr
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