SEOUL, Dec. 21 (Korea Bizwire) – South Korean retail giant Lotte Group’s hotel unit applied Monday to be listed on the Seoul bourse, taking the first critical step to improve its transparency following a succession feud.
Hotel Lotte said that it submitted the preliminary application for its initial public offering (IPO) to the Korea Exchange (KRX), the main bourse operator, after clearing up uncertainties surrounding the conglomerate’s management and other issues.
“Once the preliminary review of the (Hotel Lotte IPO application) is completed, we will proceed with the official listing procedure,” a Lotte spokesperson said.
The listing of Hotel Lotte is one of the reform pledges that Lotte Group Chairman Shin Dong-bin has made to assuage public disgust over a bitter family feud for control of the retail-focused conglomerate, which has sprawling businesses both in South Korea and Japan.
Earlier this month, Lotte said that its Japanese shareholders support the current leadership despite the ongoing succession feud. Japan-based Lotte Holdings is the largest shareholder of Hotel Lotte with a 19.1 percent stake.
A KRX representative said earlier that it is considering simplifying the screening process to facilitate its listing, using a “fast-track” system that cuts the review period to about a month.
“The result of the application review will be confirmed within January,” a KRX official said.
Considering the time needed for the demand assessment and pre-order process, the market debut could take place as early as March, according to KRX officials.
To take advantage of the speedy process, applicants should have over 400 billion won (US339.6 million) in equity capital and 700 billion won of annual sales for three years, along with other requirements.
Hotel Lotte is pushing for an IPO despite the group losing one of its two duty-free stores in Seoul last month.
Lotte kept its location in Myeongdong, a popular shopping district in downtown, but lost the operational license for another at Lotte World Tower in southeastern Seoul.
The conglomerate said earlier that Hotel Lotte is expected to have a market capitalization of around 10 trillion won ($8.6 billion) when it is publicly traded, but market watchers say losing one of its duty-free stores in Seoul in the recent competition could lead to the re-evaluation of its market value.
Also on Monday, Lotte Confectionery Co. said that it will sell 32.3 billion won worth of its shares to Tokyo-based Lotte Holdings during trading hours between Dec. 22 and 31 to step up business cooperation between the two units and improve financial status.
The move is interpreted as an effort to strengthen Dong-bin’s grip on Lotte Confectionery, which stands at a critical position in the group’s cobweb-like governance structure.
The confectionery unit has stakes in other key Lotte affiliates, including Lotte Shopping, Lotte Chilsung and Lotte Food, serving as a critical link in South Korea’s fifth-largest conglomerate.
Shin Dong-bin owns an 8.8 percent stake in Lotte Confectionery, followed by Shin Kyuk-ho with 6.8 percent and Shin Dong-joo with 4 percent.