Hyundai Merchant Marine’s (HMM’s) planned sale of its controlling stake in Hyundai Securities has been held up by South Korea’s Financial Services Commission (FSC).
The FSC is seeking clarification over a change in the composition of investors in Jabez Partners, Hyundai Securities’ second-largest shareholder.
On 2 February, Japanese financial services group Orix Corp’s private equity arm had been named the preferred bidder for the cash-strapped logistics company’s 36% stake in Hyundai Securities, for which it is offering KRW647 billion (USD590 million).
But just after Jabez signed an investment contract with Orix some of its investors pulled out.
Korean lawmakers have also questioned the transaction, noting that HMM has invested KRW120 billion in a private equity fund set up by Orix, while also putting KRW80 billion into Buffalo Finance, a special purpose company, to purchase additional shares in Hyundai Securities.
These actions suggest HMM does not intend to relinquish control of Hyundai Securities, according to members of Korea’s national assembly.
HMM’s parent Hyundai Group has been struggling since the financial crisis and prolonged downturn in shipping. Since 2013, it has been trying to raise KRW3.3 trillion to boost its liquidity and repay debts.
The group has sold its controlling stake in Hyundai Elevator, also to Orix, and divested its LNG shipping businesses.
This month, HMM announced a partial divestment of its bulk shipping and container terminal businesses.