IMM PE puts South Korea’s top travel agency Hanatour up for sale

IMM Private Equity Inc., a Seoul-based private equity firm, is selling its controlling stake in Hanatour Service Inc., South Korea’s top travel agency, four years after its purchase.

According to investment banking industry sources on Tuesday, IMM PE has begun the process of selecting a lead manager for the sale of its 16.68% stake held by Harmonia 1, a special-purpose company established by IMM PE.

The stake up for sale could rise to 27.78% if Hanatour Chairman and founder Park Sang-hwan and the firm’s Senior Vice Chairman and co-founder Kwon Hee-seok join the sale process, sources said.

Park and Kwon currently own 6.53% and 4.48% of Hanatour, respectively.

IMM PE’s stake is worth 187.8 billion won ($140 million) based on Hanatour’s market capitalization of 1.13 trillion won.

Shares of Hanatour, listed on the main Kospi bourse, finished up 2.2% at 70,200 won on Tuesday, outperforming the benchmark Kospi index’s 0.7% gain.

Given the management premium, IMM PE’s 16.68% stake could be priced as high as 300 billion won ($224 million), sources said.

HIT HARD BY PANDEMIC

IMM PE became Hanatour’s single largest shareholder after acquiring the stake at 128.9 billion won through a rights offering near the end of 2019. The private equity firm bought Hanatour’s shares at 58,000 won apiece.

Just like other travel-related firms, however, Hanatour was hit hard by the outbreak of the COVID-19 pandemic.

Hanatour’s sales plummeted from 614.6 billion won in 2019 to 40.3 billion won in 2021. The company posted operating losses to the tune of 100 billion won from 2020 to 2022.

But the travel agency quickly recovered from its pandemic woes, swinging back to profit last year.

In 2023, the company posted an operating profit of 34 billion won on sales of 411.6 billion won.

Reflecting its improving performance, Hanatour’s share price has risen 74% from a low of 40,150 won in October 2023.

With the travel industry mired in a quandary, Hanatour made strenuous efforts during the pandemic, selling off non-core businesses such as duty-free and hotel businesses.

The company has also reduced the proportion of offline package products, turning its focus toward online channels – a move that doubled the proportion of its online sales to 40%.

Industry officials said potential buyers of Hanatour include Korea’s top travel and accommodation platform Yanolja Co., accommodation booking service provider Hotels.com and Trip.com, a Chinese-owned travel service firm, as well as local and foreign private equity firms.

Write to Jun-Ho Cha at chacha@hankyung.com

In-Soo Nam edited this article.