Ilshin Spinning, a company listed on the Korea Exchange's main board, sold part of its long-held equity in HIGEN RNM, which is listed on KOSDAQ. But the size of the sale was sharply reduced from the original plan and the disposal price was lowered, fueling backlash from ordinary shareholders. They say the company, after delaying the monetization of affiliate equity that shareholders had long demanded, sold only a portion after the share price fell, missing the chance to realize profits worth hundreds of billions of won.
In particular, considering the special relationship between Ilshin Spinning and HIGEN RNM, critics say the company is repeatedly prioritizing affiliate interests over those of ordinary shareholders. The disappointment is weighing on Ilshin Spinning's share price.
Ilshin Spinning said on the 2nd it disposed of 950,000 shares—3.07% out of its 24.28% equity—in HIGEN RNM for about 28.5 billion won.
The company had originally planned to sell 2.5 million shares (8.09%) of HIGEN RNM. It had said it would dispose of the shares at 32,400 won per share to secure a total of 81 billion won and use the funds to invest in new businesses. However, the company explained that due to the counterparty's breach of contract and changing transaction conditions, the actual disposal size was reduced. The disposal price was also lowered to 30,000 won per share.
The disappointment over the transaction was reflected directly in Ilshin Spinning's share price. Ilshin Spinning's stock surged to 15,000 won after the company decided on Apr. 1 to sell its HIGEN RNM equity, and although it later underwent a correction, the uptrend appeared to continue as sale expectations held. But when the actual sale size fell short of the plan, the stock dropped back to around 10,000 won.
Shareholders' discontent is growing. They argue that while the company delayed selling affiliate equity, the stock that had soared plunged, and as a result the company missed the opportunity to cash out its holdings at the most favorable time, harming shareholder interests.
Ilshin Spinning shareholders have demanded the sale of HIGEN RNM equity since late last year, when the lockup (sale restriction) on the largest shareholder (including related parties) was lifted following HIGEN RNM's June 2024 listing. The biggest reason shareholders demanded the sale was Ilshin Spinning's chronically undervalued share price. Shareholders urged the company to sell HIGEN RNM equity and pay a special dividend using the sale proceeds.
Ilshin Spinning's stock has been stuck in a range for more than a decade. It briefly topped 20,000 won in 2015, but only then, and it has consistently failed to break out of the 10,000-won level. The company's annual revenue exceeds 500 billion won and its annual net profit reaches hundreds of billions of won, but the severe undervaluation has not been resolved.
The value of the HIGEN RNM equity the company holds alone exceeds 200 billion won. Yet Ilshin Spinning's market capitalization is only a little over 200 billion won.
Another reason for shareholder backlash is the judgment that it is hard to see the company's holding of HIGEN RNM equity as a "general investment," as the company claims.
The largest shareholder and CEO of HIGEN RNM, Kim Jae-hak, is the brother-in-law of Ilshin Spinning Chairman Kim Young-ho. HIGEN RNM was originally an unlisted company in which Ilshin Spinning was the single largest shareholder. But before listing on KOSDAQ, Ilshin Spinning sold part of its HIGEN RNM equity that it held to HIGEN RNM at a low price, and the single largest shareholder changed to CEO Kim's private company, Danoco Pro.
Ilshin Spinning gained little economic benefit in the process. Instead, it ended up giving up part of the equity value appreciation that could have been expected after the listing. This is why shareholders point out that "Ilshin Spinning is playing the role of a 'private safe white knight' protecting CEO Kim Jae-hak's unstable control, who has a special relationship with the largest shareholder, with shareholders' capital."
As a result, while the company ignored shareholders' demands, Ilshin Spinning missed the chance to realize massive profits.
HIGEN RNM, which entered the KOSDAQ market with an offering price of 7,000 won, saw its stock surge last year on expectations for growth in its actuator business, a core robot component. As the stock surged at the time, HIGEN RNM executives and employees rushed to sell shares. Even so, the stock topped 90,000 won early this year. But since then, the stock has given back its gains and is now moving around the 30,000-won level.
Regarding this, a company official said, "We hold a large amount of equity and are subject to strict disclosure obligations, and with market conditions highly volatile, it is not easy to carry out the sale." On whether it will further sell HIGEN RNM equity, the official said, "Nothing has been decided."