Korean institutional investors have joined up with local private equity operator Medici Investment Ltd. to invest around 300 billion won ($259.6 million) for a combined 34.5 percent stake in Lotte Global Logistics Co.

According to the investment banking industry Sunday, Korea Scientists & Engineers Mutual-aid Association (SEMA) and Public Official Benefit Association (POBA) in recent internal review meetings endorsed pledge of 90 billion won in a 300 billion won fund created by Medici Investment designed for an equity investment in logistics subsidiary of Lotte Group. The private equity fund will pull in more investors from the public-sector institutions to cover the rest within this month.

The fund would buy a 34.5 percent interest in Lotte Global Logisitics - 17.8 percent in existing shares owned by its majority shareholder IGIS I Corp. - a special purpose company (SPC) set up by Lotte Group and Japan-based Orix Private Equity and Hyundai Merchant Marine Co. - and new issues amounting to 16.7 percent.

Lotte Global Logistics wants to use the proceeds to improve its financial structure and seek an initial public offering (IPO). The fund promises a return of more than 10 percent per annum with the prospects of the IPO.

Public institutional players in search of higher and stable returns are betting on growth potentials of the logistics company with the group committed to foster the unit as a platform for online and offline retail sales.

Lotte Global Logistics is formerly Hyundai Logistics. Lotte Group formed the special purpose vehicle with Hyundai Merchant Marine and Orix to buy 88.8 percent stake in the company in 2014. Lotte units assumed 71 percent stake held by IGIS last year. Currently the shareholding is spread among IGIS with 17.8 percent, Lotte Chemical Corp. with 17.5 percent stake, Hotel Lotte Co. 13.9 percent and Lotteria Co. 13.7 percent.

By Song Gwang-sup

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]