The family company of Chairman Kim Hyeong-jin of Sejong Group disposed of Hyundai Motor Securities shares it bought from its subsidiary, raking in more than 13 billion won in capital gains. That is because Sejong Telecom transferred the Hyundai Motor Securities equity it held to its parent company, Sejong Co., three months ago. Right after buying the shares from the subsidiary, the stock rebounded, and the profit went entirely to Sejong.
Sejong Co. is a family company in which Chairman Kim and related parties hold more than 80% equity, and it is the de facto holding company that owns 65% equity in Sejong Telecom, the core of the group.
According to the Korea Exchange (KRX) on the 23rd, Sejong sold 2,563,637 shares of Hyundai Motor Securities it held on the 19th in the market at 13,870 won per share, realizing a profit of about 13.8 billion won.
Those shares are part of the 4 million shares that Sejong Telecom disposed of in November last year through an after-hours block deal. At the time, Sejong Telecom sold all Hyundai Motor Securities shares at 8,500 won per share to repay borrowing fund and secure liquidity, and its parent, Sejong, acquired them all.
Sejong Telecom had held Hyundai Motor Securities shares for a long time. As of early February last year, the average acquisition price was 13,318 won per share, which meant a sizable valuation loss compared with the share price in the low 6,000-won range then. It later participated in Hyundai Motor Securities' large rights offering allocated to shareholders to increase its equity and partly recoup losses, but in the end it invested about 35.4 billion won and disposed of them for 34 billion won, incurring a loss of around 1.4 billion won.
By contrast, the parent Sejong took over the shares the subsidiary cut at the bottom and hit a short-term "jackpot." Hyundai Motor Securities' share price has risen steeply since the start of the year on expectations of improved earnings and revisions to the Commercial Act (corporate value-up program).
In fact, the Hyundai Motor Securities share price, which hovered at 7,900 won on Feb. 2, surged to 13,630 won on the 20th, soaring 73% in just a month and a half. Sejong secured shares at the start of this rally and succeeded in monopolizing hefty gains.
Some in the market are voicing criticism that "the listed affiliate swallowed the loss, and the owner family monopolized the profit." As a non-listed company, Sejong is effectively controlled by the owner family, with Chairman Kim Hyeong-jin (77.01% equity) and related parties holding a combined 83.82% equity.
Meanwhile, with this sale, Sejong's Hyundai Motor Securities equity ratio fell from 6.47% to 2.32% (1,436,363 shares). However, as it still holds a not-insignificant equity stake, attention is on whether the owner family will further "cash out" through additional sales.