Customers interact with employees at a Samsung retail store in Seoul. Samsung SDS said its board yesterday approved a plan to list the company’s shares on Korea exchange.
Dow Jones/Seoul
Conglomerate Samsung Group’s information technology unit plans to go public in what could be one of the biggest share sales in South Korea this year and potentially revive the country’s sluggish stock market.
Samsung SDS Co, which is valued at over $11bn in the over-the-counter market, said its board yesterday approved a plan to list the company’s shares on Korea exchange by the end of this year as part of efforts to expand its capital base and expand its core businesses globally.
The proposed initial public offering comes after some Korean companies withdrew their share-sale plans in the past year as the domestic and global stock markets remained sluggish.
Hyundai Oilbank Co and SK Lubricants Co indefinitely delayed their listing plans last year, citing unfavourable market conditions. In March, Lotte Shopping Co postponed a Singapore initial public offering of shopping mall assets that was expected to raise up to $1bn.
If Samsung SDS’s IPO proves to be successful, others could follow suit, analysts say. The company is trying to take advantage of an improving economic climate. The Korean economy is forecast to grow 4% this year on the back of strong exports following a 3% expansion in 2013, according to the Bank of Korea. “We’re aggressively expanding our business at home and abroad and we need money to finance that,” company spokesman Jason Jo said over the phone.
The company plans to select lead managers for its share sale this month.
Samsung SDS, which provides all the main information technology services for Samsung Electronics Co such as computing and data centers, as well as technology services for other Samsung affiliates, said it would pursue acquisitions and partnerships with local and foreign firms to gain access to new technologies in mobile, cloud and cybersecurity.
Analysts said the share sale could also help Jay Y. Lee, the heir-apparent of Samsung Group Chairman Lee Kun-hee, to secure the funds needed to take control of other Samsung affiliates as part of a transition of power from the chairman to his children.
Samsung Electronics, the world’s largest smartphone maker, is the biggest shareholder of Samsung SDS with a 22.58% stake, followed by building and trading unit Samsung C&T Corp with 17.08% and Jay Y. Lee, who owns 11.25% of the company.