STIC to cash in on Aug IPOs following HYBE block sale

South Korea's private equity firm STIC Investments Inc. is tipped to be one of the main beneficiaries of upcoming initial public offerings in the country, following its lucrative exit from HYBE Co. last week.

Through its two special situations funds (SSFs) that raised about 2 trillion won ($1.8 billion) in aggregate between 2016 and 2019, the Seoul-based PEF has invested in venture companies in Asia, including Grab Holdings Inc., Southeast Asia's largest unlisted startup. 

Among them, Hancom Life Care Inc. and HK inno.N Co. are set to go public in South Korea next month, three to four years after STIC had put 80 billion won each into the two companies.

Their IPOs are expected to generate up to 109 billion won ($96 million) in proceeds for the Korean PEF which plans to sell about 40% of its shareholdings in both companies through the public offering.

Once its mandatory holding period for the remaining shares expires early next year, the investment firm will likely be able to secure more than 280 billion won in total, based on their IPO price range, or 75% more than its investments of 160 billion won in the two companies. 

From HK inno.N Co., best known for its top-selling anti-hangover drink CONDITION, STIC is expected to secure up to 58.5 billion won from the partial divestment.

The PEF owns a 10.81% stake in inno.N after it participated in the 1.3-trillion-won acquisition led by Kolmar Korea of the pharmaceuticals company in 2018. Its IPO price between 50,000 and 59,000 won is as much as 84% higher than the 32,000 won at which STIC's SSF I had bought shares in inno.N. 

In a back-to-back IPO, Hancom Life Care, in which STIC is the second-largest shareholder with a 39.9% stake, is set to list on the Korea Exchange next month.

STIC is likely to pocket as much as 50.6 billion won in proceeds from a stake sale in the supplier of firefighting suits and air respirators for the armed force and fire stations.

Its IPO price between 10,700 and 13,700 won is as much as 75% higher than STIC's estimation in 2017. STIC had joined in the 200 billion won acquisition of Hancom by domestic software developer Hancom Group as a financial investor.

Last week, STIC's SSF I, which used to be the third-largest shareholder in HYBE Co., exited from the label behind BTS in a block deal. The divestiture generated 814.1 billion won in proceeds.

Last year, its 1.2 trillion won SSF II, to which South Korea's National Pension Service committed 400 billion won as the anchor investor, put $200 million into Grab last year. It is poised to net a handsome return from the investment as the Singapore-headquartered company is going public through a merger with a special-purpose acquisition company. The merger is reportedly delayed to the last quarter of this year.

Its other investments include the country’s subscription-based e-book service provider Millie’s Library which recently hired an IPO manager to list next year.

Founded in 1999 by Do Yong-hwan, a former Shinhan Life Insurance's investment chief, STIC has $4.5 billion of assets under management. Kang Shin-woo, who had served as CIO of the Korea Investment Corporation between 2016 and 2019, joined STIC as an operating partner in 2020.

Write to Jong-woo Kim at jongwoo@hankyung.com
Yeonhee Kim edited this article.