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https://www.hankyung.com/article/2024112823631
Sent: Nov 29 2024, 06:00 KST Edit: Nov 29 2024, 06:06 KST
The secret of HYBE's IPO from 4 years ago belatedly revealed
Contract made with private equity funds and shareholders
Received around 30% of investment gains
Not disclosed during IPO process
Company states "Determined it wasn't subject to disclosure"
HYBE founder Bang Si-hyuk has been belatedly confirmed to have earned approximately 400 billion won from HYBE's IPO four years ago. This came from receiving about 30% of investment profits from private equity funds (PEFs) that held HYBE shares, under the condition of "going public." However, this shareholder agreement was not disclosed during HYBE's IPO process. While HYBE made a spectacular debut with shares rising 150% above the offering price, the stock plummeted as these PEFs dumped their holdings from day one, losing half its value within a week.
According to the financial investment industry on the 28th, Chairman Bang signed shareholder agreements with STIC Investments, Eastone Equity Partners (Eastone PE), and New Main Equity before HYBE's (then Big Hit) IPO in 2020. STIC Investments held 12.2% of HYBE shares, while Eastone PE and New Main Equity held 11.4%. Through the agreement, Bang was to receive about 30% of these PEFs' sale profits after the IPO, and if the IPO failed within the deadline, he would buy back their shares with principal plus interest.
Both PEFs and Chairman Bang made substantial profits when HYBE successfully went public in October 2020. STIC Investments invested 103.9 billion won and recovered 961.1 billion won. Eastone PE and New Main Equity invested 125 billion won and achieved similar results. The industry estimates that Chairman Bang received around 400 billion won from these PEFs.
It is highly unusual for a majority shareholder to enter into such agreements with PEFs before listing to secure private gains. This agreement was not disclosed during either the Korea Exchange's listing review or in the securities registration statement to the Financial Supervisory Service. Of the PEFs' 23.6% shareholding, 15.1% was not subject to lock-up periods. The PEFs sold 4.99% of shares (post-listing basis) in the first four days of trading, converting them to 425.8 billion won in cash. HYBE's stock price, which had hit the upper limit (351,000 won) on the first day of trading, fell 60% within a week.
HYBE stated, "All four lead managers and legal advisors determined that since this was an agreement between specific shareholders with no financial damage to general shareholders, it was not necessary to include it in the securities registration statement."
Bang Si-hyuk's 'Secret Contract' 1-2 Years Before IPO, HYBE Concealed 'Shareholder Agreement'... Stock Price Plunges After Hitting Upper Limit Due to PEF's Mass Selling