Hotel Lotte, the de facto holding company of South Korean conglomerate Lotte Group, will go public on the main Korea Composite Stock Price Index (Kospi) bourse on June 29. The lodging and duty-free tycoon submitted securities registration to Financial Supervisory Service and officially kicked off with initial public offering process on Thursday.

The company plans to run road shows for investors from home and abroad from end-May until mid-June, then determine offering price on June 20 after it taps demand from institutional investors in mid-June. Its shares will be available to retail investors from June 21 to 22, and receive the proceeds by June 24.

According to the Hotel Lotte’s prospectus submitted to regulators, the company will put 35 percent stake, or 47,855,000 shares, for IPO - 34,200,000 shares in primary distribution and 13,650,000 shares in secondary distribution from four units of Hotel Lotte’s major stakeholder dubbed L Investment Company. The secondary distribution refers to offering of a large block of shares previously issued but held by a major shareholder.

Of the total shares going public, 20 percent or 9,571,000 shares will be first allotted to employees while the remaining 80 percent or 38,284,000 shares will be split between retail and institutional investors - 9,571,000 shares (20 percent) and 28,713,000 shares (60 percent), respectively.

Hotel Lotte aims to sell shares at a range of 97,000 won ($81.64) to 120,000 won apiece, and it expects to raise about 4.64 trillion won based on the lowest offering price.

Currently, Japan-based Lotte Holdings stands as the majority stakeholder of Hotel Lotte with 19.07 percent shares. When taking account of 72.65 percent shares owned by L Investment Company’s 11 units where Lotte Group ChairmanShin Dong-bin is registered as chief executive officer, Lotte Group’s affiliates in Japan actually dominates control of Hotel Lotte with over 99 percent stake.

Once Hotel Lotte completes IPO as planned, the stake of Japan-based shareholders will decline to 65 percent. Chairman Shin pledged to “lower the share held by Japanese entities to below 50 percent on the long-term through recapitalization” at the parliamentary inspection held at National Assembly last year. Meanwhile, Lotte Group is expected to raise around 5 trillion won cash through Hotel Lotte IPO.

By Sohn Il-seon, Bae Mi-jung, and Song Gwang-sup

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