Carlyle arm buys 10% stake in South Korean logistics firm Hyundai Glovis

Shares in Hyundai Glovis jumped as high as 10.4% on Thursday after US hedge fund Carlyle bought a 10% stake in the logistics arm of the Hyundai Motor Group as the founding family moved to avoid a regulatory clash with the South Korean government.

Hyundai Glovis shares surged in morning trading on Seoul’s benchmark Kospi index, before gradually paring gains to close the day 6.7% higher.

The stock price increase came hours after Hyundai Motor Group Chairman Chung Euisun unveiled in a regulatory filing that he and his father had sold a combined 10% stake in Hyundai Glovis for 611.3 billion won ($508 million) to Project Guardian Holdings, a Carlyle subsidiary.

Analysts say the Chungs sold the stake to skirt problems with a Korea Fair Trade Commission regulation stipulating that owner families of a parent company may not control more than 20% of an affiliate. Previously, the Chungs had owned a 30% stake in Glovis.

“These stake sales … are to avoid a regulation which bans internal trade between affiliates controlled by owner families,” said Song Sun-jae, an analyst at Hana Financial Investment.

The KFTC revised South Korea’s antitrust law in 2021 to better control the country’s powerful family-run conglomerates, known as chaebol. The change is aimed at preventing owner families from using share ownership in group companies as a vehicle to benefit themselves.

It is the latest example of scrutiny placed on chaebol by the government of President Moon Jae-in. Moon has vowed during his five-year term, which ends this year, to tame the influence of conglomerates such as Hyundai and Samsung, but data show they continue to dominate in the country’s economy.

Chaebol chiefs have frequently found themselves in court over governance issues and some have ended up in prison, though often they are ultimately shown leniency due to their perceived importance to the economy.

Song said the Hyundai Glovis stake sale is good for business, as it not only removes potential regulatory risks but clears up uncertainty. “It’s also positive that the buyer is a private equity which may have evaluated the company positively,” Song added.

The article was first published on Nikkei Asia.

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.