Samsung SDS doubles IPO price on debut after $1.1 billion listing

Reuters News
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Posted: Nov 13, 2014 8:16 PM

SEOUL (Reuters) - Samsung SDS Co Ltd, the IT services affiliate of Samsung Group, doubled its IPO price on its market debut on Friday, putting a 5.6 trillion won ($5.09 billion) price tag to the stakes held by the Samsung Group's three heirs.

SDS, which during Friday's trade became the 5th-largest market capitalization on the South Korean bourse, is 19.05 percent owned by the three children of hospitalized Samsung Electronics Co Ltd Chairman and group patriarch Lee Kun-hee.

The listing is seen as a way to monetize their stakes to possibly fund a generational succession, by paying off inheritance tax or increasing holdings in key Samsung companies where they have scant control, analysts said.

"It's not a company that's near the top of Samsung Group's ownership structure. It is the company most fit to maximize profits for the group's major shareholders," Eugene Securities analyst Yoon Hyuk-jin said.

The Lee heirs, including Samsung Electronics vice chairman J.Y. Lee, own about 14.7 million shares in Samsung SDS, valued at about 5.6 trillion won based on the opening price.

The IT services company opened trade at 380,000 won, valuing it at about 29 trillion won, compared with an IPO price of 190,000 won that came at the top end of its indicative range.

SDS, seen adding new business to raise company value and increase dividend payouts to increase the value of the owner family members' stakes, also provides logistics services.

It sees about 80 percent from group affiliates, including about 65 percent from Samsung Electronics and its subsidiaries.

The IPO was 134 times oversubscribed by retail investors, attracting about 15.6 trillion won in demand. It's biggest shareholder is Samsung Electronics with a 22.6 percent stake.

Investor interest was heightened as South Korea has seen a dearth of large-scale IPOs in recent years, with only three listings exceeding 500 billion won since May 2010, when Samsung Life's 4.9 trillion won IPO became the country's largest ever.

SDS will be followed by Samsung Group's de facto holding company Cheil Industries Inc, expected to be listed in December in an IPO worth about $1.2 billion to 1.4 billion.

(Reporting by Joyce Lee; additional reporting by Se Young Lee; Editing by Stephen Coates)