Hyundai Heavy Industries Co., South Korea’s largest and financially-troubled shipbuilder, is mulling to split up shares of its brokerage unit and offer a controlling stake of 50 percent plus one share to potential buyers to speed up the sales process. The shipbuilder had initially planned to sell shares of HI Investment & Securities Co. en bloc, but changed its strategy after struggling to find a buyer.

According to multiple sources from the investment bank industry on Thursday, Hyundai Heavy Industries is aiming to sell a minimum controlling stake of the 85.32 percent shares of HI Investment & Securities owned by Hyundai Mipo Dockyard Co. An unnamed investment bank official said that Hyundai Heavy Industries has recently made an appeal to potential buyers that it is willing to sell 50 percent plus one share of HI Investment & Securities, the minimum ownership that guarantees management control. The shipbuilder has also expressed that it would be flexible and open to negotiate the terms, the official noted.

The shift in the plan comes on concerns that the shipbuilder wouldn’t be able to sell the brokerage house that could bring in much-needed hard cash due to the bulky size of the deal. Potential candidates Meritz Securities Co., Shinhan Investment Corp., and BNK Financial Group reportedly lost appetite due to the high price tag.

Hyundai Heavy Industries, which desperately needs to sell lucrative HI Investment & Securities to pull out of liquidity plight, decided to widen the options and be open to sell the shares in pieces if package sale cannot go through in near future.

The offer of 50 percent plus one share stake in HI Investment & Securities would bring down the sale price to around 500 billion won instead of initial hope of getting from 800 billion won ($712 million) to 1 trillion won in bloc sale. In such scenario, the shipbuilder would pursue sale of the rest later in private deal or public offering.

According to market observers, local brokerage firms that are hoping to expand their presence in the industry are likely to show interest in purchasing controlling stake in the big play.er

As of the first quarter ending March, HI Investment & Securities had net worth of 703.7 billion won. NH Investment & Securities Co. and KB Investment & Securities Co. may express interest in the bid as they are hoping to increase capital to meet the minimum equity requirement presented by the Korean government to become a mega-sized investment bank, sources note. The Financial Services Commission is considering the plan of providing benefits including diversified financing sources to securities firms with 5 trillion won or more equity capital to nurture mega-sized investment banks.

Another official from the investment bank industry who asked to be unnamed said that private equity funds are also likely to show interest in the bid if the sale becomes less bulky.

By Kim Hyo-hye

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