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November 13, 2018

Morgan Stanley’s profit more than doubles on Hyundai Rotem block deals

PUBLISHED : June 05, 2018 - 15:38

UPDATED : June 05, 2018 - 15:38

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[THE INVESTOR] Morgan Stanley Private Equity is estimated to have earned about 200 billion won (US$187 million) profit after selling off its stake in Hyundai Rotem, the train-making unit of Hyundai Motor Group whose stocks are flying high on expectations about the upcoming North Korea-US summit next week, according to industry sources on June 5.

The private equity arm sold another 7 million shares in a block deal on June 4. The selling price was about 245.5 billion won or 35,075 won apiece, a 13.5 percent discount on the closing price of 40,550 won. 




This is the third block deal of Morgan Stanley this year that acquired more than 40 percent stake in Hyundai Rotem for 203.8 billion won back in 2006. The firm sold 2.85 million shares for 48.5 billion won in January and 8.23 million shares for 23.04 million in May. Following the latest deal, its stake is expected to fall to 3.5 percent.

Since the acquisition of the stake priced at 7,527 won apiece a decade ago, the PEF sought exit opportunities. It sold 6 million shares for 138 billion won in 2013 when the Hyundai unit was listed on KOSPI. But since then the firm couldn’t find the right timing, let alone some custodial issues as the second-largest shareholder.

Starting this year, the firm started offloading the shares amid some positive signs of a smoother inter-Korean relationship that could lead to the resumption of economic exchanges and large-scale infrastructure projects like railways connecting the two Koreas.

Hyundai Rotem, the only train maker here, has widely been considered one of the beneficiaries and its stock price has more than tripled over the past months. Morgan Stanley’s profit also more than doubled over the investment.

In the meantime, the firm’s latest block deal drove down Hyundai Rotem’s share price on June 5. The shares closed at 38,850 won, down 4.19 percent from the previous day. 

By Lee Ji-yoon (jylee@heraldcorp.com)

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