More and more South Korean small- and mid-sized listed companies have sold shares in their affiliates for financial structure improvement.

According to the Financial Supervisory Service on Wednesday, TS Corp. listed on the main Korea Composite Stock Price Index (Kospi) bourse disposed of a full stake, or 2 million shares, in TS Bank to Kiwoon Securities Co. for 88.5 billion won ($78 million) on the previous day. TS bought the stake in TS Bank in 1996 and the bank has annually made net profits worth 6 to 7 billion won over the recent three years. TS sold its affiliate it owned for more than 20 years because it wanted to realign business structure through preemptive restructuring.

Another company Raygen Co. listed on the secondary Korea Securities Dealers Automated Quotations (Kosdaq) market disposed of 5 million shares in Raymold early this month after suffering losses in the first quarter following last year. Raygen sold the shares in Raymold, which had been its core affiliate in charge of mold manufacturing business, mainly because it posted a net loss worth 1.7 billion won last year.

The nation’s leading chinaware manufacturer Haengnam China sold a full stake in its affiliate the Kwangju Ilbo for 4 billion won last month for financial structure improvement and Hankook Steel Co. also disposed of a full stake of 400,000 shares in its affiliate Befesa Zink Korea Co. at 5 billion won on Monday.

Soulbrain Co., which saw its operating profit more than doubled from last year to 100 billion won last year, sold a 33.6 percent stake in its affiliate Soulbrain ENG Co., a display inspection machine company, to a private equity fund at 25 billion won. The stake sale aims to focus on the core business of chemical materials for semiconductor display.

More and more listed companies have disposed of shares of their affiliates. According to Korea Exchange (KRX) 77 companies have sold stocks of their affiliates from January to June of this year. The figure is a 35.1 percent increase from the same period of last year. The shares which have been sold amounted to 8.98 trillion won, up 96.7 percent on year.

By Lee Yong-gun and Chun Gyung-woon

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