Blackstone, Hahn & Co. to reap $800 mn from two Korean IPOs

South Korea's largest used car seller K Car Co., wholly owned by Hahn & Co., will go public on the country's main stock exchange in October, which will likely generate as much as 675 billion won ($583 million) in proceeds for the Seoul-based private equity firm.

Simultaneously, handbag maker Simone Acc. Collection Ltd. will make a trading debut on Kospi in October, in which Blackstone Group with a 30% stake is expected to pocket up to 320 billion won ($276 million).

Both companies submitted securities reports to the regulatory Financial Supervisory Service on Monday to kick off their bookbuilding process later next month. 

K Car, formerly known as SK Encar, will float 16.83 million shares at a price between 34,300 won and 43,200 won for the IPO. That will raise as much as 727.1 billion won, slightly over 90% of which will be funneled into its shareholder Hahn & Co.

Hahn & Co. had acquired whole ownership of the former SK Group's unit for 200 billion won in 2018. The used car selling platform received preliminary approval for its stock market listing from the Korea Exchange last week.

The company assessed its enterprise value at 2.9 trillion won, an over 10-fold increase since its acquisition by the private equity house. The valuation is equivalent to 1.59 times its annual revenue.

To price its IPO shares, it discounted the corporate value by 24 to 40%. At the top of the price guidance, its market capitalization is expected to reach 2.1 trillion won.

Its first-half operating profit surged by 131.8% to 38.5 billion won from a year earlier, with the earnings before interest, tax, depreciation and amortization up 138.5% to 58.2 billion won, driven by strong sales through online channels.

It plans to use the IPO proceeds to strengthen its e-commerce platform. Its bookbuilding is scheduled for Sept. 27-28, followed by the retail subscription between Sept. 30 and Oct. 1.

Goldman Sachs and NH Investment & Securities Co. were joint bookrunners.

Simone, Asia's first original development manufacturer (ODM), plans to sell 8.37 million shares at a price between 39,200 won and 47,900 won to raise up to 401 billion won. Its market capitalization is estimated at 1.3 to 1.6 trillion won. 

In 2015, Blackstone invested $300 million to acquire a 30% stake in Simone, in which its Chairman Park Eun-kwan and his wife control 61.2% combined.

The US investment firm has earned 100 billion won in dividends from the handbag maker up to now. The October listing will generate an additional 320 billion won in proceeds for Blackstone, assuming it is priced at the top of the indicative range.

After the IPO, Blackstone's remaining shares will be valued at 140 billion won, with 20% of the company's outstanding shares in circulation. 

Simone manufactures handbags for around 20 global brands, including Donna Karan New York (DKNY), Burberry, Marc Jacobs and Coach. Original equipment manufacturing and ODM account for 70% of its total revenue

Its 2020 sales declined by almost 40% to 621.8 billion won from a year earlier, battered by the pandemic-induced economic slowdown. Its operating profit dwindled by almost two-thirds to 46.7 billion won during the same period.

Its bookbuilding is set for Sept. 24-27, with the subscription from retail investors scheduled for Sept. 29-30. Samsung Securities, Mirae Asset Securities and Korea Investment & Securities Co. are managing Simone's IPO.

Write to Ye-jin Jun at ace@hankyung.com
Yeonhee Kim edited this article.