S.Korea's top golf course operator aims for 2022 IPO

South Korea's Golfzon County Co. has begun the process to apply for an initial public offering next year, which analysts said would value the country's largest golf course management company at over 1 trillion won ($836 million).

Golfzon County, 53.47% owned by MBK Partners, recently appointed Samsung Securities Co. and NH Investment & Securities Co. as its IPO managers, according to investment banking sources on Oct. 6.

The company was established in January 2018, after spun off from Kosdaq-listed Golfzon Newdin Holdings Co. which holds the remaining 46.53% stake in the spin-off.

It is expected to make a trading debut by the end of next year. MBK had invested about 300 billion won in Golfzon County by participating in four rounds of its rights offering. The private equity firm is allowed to exercise an option to sell its 53.47% stake in the company, if its IPO does not take place by May 2023. 

ON TRACK FOR RECORD EARNINGS

Analysts said now would be the right time for Golfzon County to kick off its IPO process. After making a series of acquisitions of golf courses in the country over the past few years, the company now runs 17 golf courses across the country.

As the golf industry thrived in the COVID-19 pandemic, the company is on track to achieve its largest-ever results this year.

Its operating profit is forecast to top 150 billion won this year, more than double the previous year's 62 billion won. In 2019, its operating profit stood at 38.2 billion won. Last year, revenue came to 217.3 billion won, up sharply from 135.5 billion won the previous year.

On top of the asset value of its golf courses, the high revenue growth and operating margins will boost Golfzon County's enterprise value to over 1 trillion won, according to analysts.

That compares with the market value of Golfzon Co., a screen golf chain, at 900 billion won on the junior Kosdaq market. Golfzon Newdin is traded at 380 billion won on Kosdaq.

On the downside, MBK's high ownership could pose a drag on its valuation. If the private equity firm converts its preferred shares in the golf company into common shares, its stake will rise to 70%.

The planned IPO comes as MBK is in the process of selling Japan's largest golf course operator Accordia Next Golf, in a deal estimated at up to 400 billion yen ($3.7 billion).

Write to Ye-jin Jun at ace@hankyung.com
Yeonhee Kim edited this article.