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Capital raising

Stock, bond issues in S.Korea set for a record year in 2021

Apr 06, 2021 (Gmt+09:00)

Yeouido, the main financial street in South Korea
Yeouido, the main financial street in South Korea

South Korean companies, having raised 30 trillion won ($27 billion) in both equity and bond issues in the first quarter of this year, are on course to set a new record for capital raising for the entire year, according to the country's top financial regulator.

Driven by year-long stock market rallies, their rush to secure cash garnered a warm response from investors who let down their guard on the survivors of the global pandemic.

Amid expectations of a global economic recovery, the surging valuations of companies in the growth industries of bio, rechargeable battery, internet, gaming and renewable energy prodded Korean companies to step up their advance into new businesses with investor money.

The value of domestic companies' new share sales has reached 12 trillion won so far this year as of Apr. 2, according to the Financial Supervisory Service (FSS). The tally is close to the annual total of 12.9 trillion won in 2011, the year of the largest-ever equity fundraising in the country. 

In the corporate bond market, the value of new bond issues hit a quarterly record of 18.5 trillion won for the same period.

In March, Korean Air Lines Co. raised 3.32 trillion won in the the largest-ever rights offering by a domestic company, to finance its 1.8 trillion-won acquisition of Asiana Airlines Inc. Additionally, it is planning to sell 300 billion won worth of new bonds this month.
Graphics by Jerry Lee
Graphics by Jerry Lee


As investors continued to move up the risk spectrum for better yields, lower-rated companies, or those just above junk bond status, began to tap into the capital market to prepare their first-time bids for acquisition targets.

They lured yield-hungry investors, offering 4%-range interest rates per year, higher than the savings rate near zero. So far this year, none of the domestic companies saw their new bond issues undersubscribed at home.

Hanjin KAL Co.'s 100 billion won bond issue in February was 1.5 times oversubscribed. The new bond from Korean Air's parent company was rated BBB and offered up to 4.1% per year. The BBB rating is at the bottom of the investment grade, or just above junk bonds.

Doosan Infracore Co., a construction equipment maker, saw its two-year bond sale worth 110 billion won more than twice oversubscribed in February. The triple B-rated debt offered 4.3% per year.

It was a drastic turnaround for the BBB-rated company, following Hyundai Heavy Industries Holdings' purchase of a controlling stake earlier this year. Late last year, Doosan Infracore's planned sale of a 150 billion won bond drew only 1 billion won in subscriptions. 
Graphics by Jerry Lee
Graphics by Jerry Lee

IPOs & M&As

The capital-raising boom has turned potential sellers into buyers in the M&A market. After weathering the COVID-19 fallout, deep-pocketed mid- to low-tier business groups, led by Hanwha and CJ, are now on the lookout for acquisition targets.

Hanwha Systems Co., a defense and IT service unit of Hanwha Group, is set to sell 1.2 trillion won worth of new shares. It will funnel the proceeds into new businesses such as air mobility and satellite communications, as well as into a possible stake purchase of a US flying car company.

Its affiliate Hanwha Solutions Co. also raised 1.3 trillion won in a rights offering in February.

Among the companies up for sale, eBay Korea and Hanon Systems, an automotive supplier, are likely to top the list, in deals estimated at up to 5 trillion and 10 trillion won, respectively.

Initial public offerings in the country are expected to top 20 trillion won ($18 billion) in value this year, with a greater number of high-profile companies and startups, including LG Energy Solution Co. and gaming developer Krafton Inc., preparing to go public.

Write to Jin-Seong Kim and Eun-Jung Kim at

Yeonhee Kim edited this article.

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