Hyundai Rotem raises $585 mln in S.Korea's largest IPO since 2010


By Joyce Lee

SEOUL, Oct 18 (Reuters) - South Korean train manufacturerHyundai Rotem Company raised 622.4 billion won ($585.22 million)in an initial public offering, capitalising on robust demand forthe country's largest IPO since 2010 and a lack of similar-sizedlistings.

The offering of 27.06 million shares was priced at 23,000won per share, at the top of an 17,000-23,000 won indicativerange, making it South Korea's fourth largest IPO since 2006,when the local stock exchange's records began.

"Hyundai Rotem's stable profit model of captive markets,coupled with South Korean shares' recent attractiveness amidvolatile global market conditions, seems to have drivenappetite," said Lee Jae-won, an analyst at Tong Yang Securities.

South Korea has seen a standstill in offerings exceeding 300billion won since 2011, as weak demand and difficult marketconditions such as the euro zone crisis delayed listing plansfrom companies such as Hyundai Oilbank and POSCO SpecialtySteel.

But Hyundai Rotem tapped the market when the benchmark KoreaComposite Stock Price Index (KOSPI) is at itsyear-to-date high, driven by a record 35 consecutive sessions offoreign buying which had accounted for more than 12.1 trillionwon in net inflows as of Thursday.

Hyundai Rotem has more than 90 percent market share in SouthKorean train orders, as well as a record of steady battle tankorders from South Korea's military. It also builds processinglines for the factories of major shareholder Hyundai Motor Co and affiliate Hyundai Steel Co.

After the listing, Hyundai Motor will own a 43.4 percent ofthe company, down from a 57.6 percent stake. A Morgan Stanley fund, which had owned the remaining 42.4 percent beforelisting, will see its stake pared down to 24.8 percent.

Hyundai Rotem reported 175 billion won in operating profitfor 2012 on 3.1 trillion won of revenue. It has earmarked themajority of the proceeds to pay down debt and improve the firm'sfinancial structure, Chief Financial Officer Kim Young-gon toldreporters on Wednesday.

Bank of America Merrill Lynch, Deutsche Bank, Daewoo Securities Co Ltd and WooriInvestment & Securities Co Ltd were the IPO's globalcoordinators and joint bookrunners.

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