The government has selected IBK Investment & Securities as the underwriter for the sale of NXC shares, which were inherited as inheritance tax by the bereaved family of Nexon founder Kim Jung-ju, who passed away. After the initial underwriter selection bid was unsuccessful, the government has completed the selection of the underwriter following a re-announcement.
According to investment banking (IB) industry sources on the 11th, the Korea Asset Management Corporation (KAMCO) has selected IBK Investment & Securities as the underwriter for the sale of NXC shares. Previously, in the underwriter selection process conducted last October, only one company participated in the bid, which resulted in failure. According to Article 11 of the Enforcement Decree of the State Contract Act, it is stipulated that 'competitive bidding is established through valid bids from two or more participants.' After that, a new announcement was made last month, and the selection of the underwriter has been completed earlier this month.
The object of the sale is the entirety of the 851,968 NXC shares (23.9%) held by the government. This is the amount that the heirs of founder Kim paid to the government as inheritance tax in May 2023. NXC serves as the holding company for the Nexon Group, with Nexon Japan listed in Japan as a subsidiary and Nexon Korea in South Korea as a grandchild company.
With the selection of IBK Investment & Securities as the sale underwriter, the NXC share sale process is expected to get back on track. Previously, the Ministry of Strategy and Finance attempted to sell NXC shares publicly on two occasions. However, these attempts failed due to high prices. The government currently values the NXC shares at about 4.7 trillion won, which is the figure that combines the net worth of the unlisted NXC shares with a 20% management premium.
In the industry, there are assessments that the chances of successfully selling the NXC shares held by the government are slim. This is because it is a holding company and not a Japanese entity, and it is considered a minority shareholding that diminishes its attractiveness. Even if one were to acquire all of the shares to become the second-largest shareholder of NXC, they would not have direct ownership of the shares of Nexon Japan, which is the operating company and 'core' entity. Additionally, since NXC is an unlisted company, the difficulty in recovering funds through future sales is also high.
However, the government is said to be willing to significantly lower the share price in this sale, which is conducted through an underwriter following the failure of the public sale. The Ministry of Strategy and Finance has projected non-tax revenue of 3.7 trillion won from the NXC share sale next year. This amount is approximately 1 trillion won lower compared to the previous public sale.
If this sale is successful, IBK Investment & Securities is expected to receive a hefty success fee. According to KAMCO, the success fee will be paid based on the total sale amount multiplied by the single commission rate proposed by the underwriter. KAMCO has requested that the commission rate be set within 0.3%. If the shares are sold for 3.7 trillion won, approximately 11 billion won in success fees would be received.