Craft beer maker Jeju Beer sells stake to car repair company

South Korea’s leading craft beer maker Jeju Beer Co. has sold a controlling stake owned by its founder and family to a small domestic car maintenance and repair service company, nearly unheard of in the market, for 10.2 billion won ($7.6 million).

Jeju Beer said in a regulatory filing on Tuesday that its founder and Chief Executive Moon Hyuk-kee and his family had signed an agreement to unload their entire 14.79% stake to Double HM.

The Seoul-based car repair company, founded in 2021, reported 300 million won in net profit in 2023 on sales of 2.7 billion won. Its equity capital stands at 900 million won.

After the share purchase, Double HM will raise 10 billion won in rights offering in Jeju Beer in May for placement to an investment company, known as GY Investment.

The offering will reduce its ownership to 13.5%, while raising GY Investment’s stake to 14.8%, the single-largest shareholding, according to Jeju Beer.

Jeju Beer then will raise 20 billion won each through the issuance of bonds with warrants and convertible bonds from two small homegrown investment companies. The capital raising will again make the investment firms the largest shareholder.

The three investment companies set to take part in Jeju Beer’s capital raising are hardly known in the investment field. Industry observers question their identities and financial capabilities.

 
Jeju Beer has been rumored to be put up for sale since the end of last year. It was said to directly contact potential buyers, including beer franchise companies, without hiring a sales advisor.

Since its inception in 2015, the country’s first listed craft brewery has remained in the red. Its revenue in 2023 dropped 6.3% on-year to 22.5 billion won, with an operating loss of 11.0 billion won. 

It enjoyed a craft beer boom during the COVID-19 period, driven by the home drinking craze.

However, the craft beer bubble burst with the rising popularity of whiskey and highballs. Craft beer has also yielded to Japanese brands.

The stake sale came three years after its debut on the Kosdaq market in 2021.

While many of its early stage investors, including two Seoul-based SBI investments and Forest Partners cashed out after its initial public offering, StoneBridge Ventures Inc. remains its second-largest shareholder with a 13.15% stake.

Its ownership will be diluted after Jeju Beer carries out capital raising through rights offerings, bonds with warrants and convertible bonds as planned.

That could likely delay its exit from the beer brand, coupled with the gloomy outlook for the craft beer market.

“It is doubtful whether its new buyer will be able to turn around Jeju Beer, considering that it is not a liquor company and smaller than Jeju Beer in terms of assets," said a beer company official.

Following the stake sale news, shares in Jeju Beer plunged 21.49% on Tuesday to end at 1,180 won, close to the stake sale price of 1,175 won per share.

Write to Jong-Kwan Park and Hun-Hyoung Ha at pjk@hankyung.com


Yeonhee Kim edited this article.