Over 200% Profit in Five Years
Morgan Stanley Private Equity (MSPE) has sold 7 million shares (8.2% of the total shares) of Hyundai Rotem for 245 billion won (US$229.4 million) in a block deal (off-hours block trading).
The shares were a leftover from the company's sales of the Hyundai Rotem shares last month.
Morgan Stanley PE estimated institutional investors’ demand for the shares after trading ended on June 4. It originally planned to sell 6 million shares but increased its sale volume as demand from institutional investors was stronger than expected.
The selling price was 35,075 won won per share, a discount of 13.5% from the closing price.
Morgan Stanley PE had already sold 8.23 million shares (10% of the entire shares) of Hyundai Rotem on May 2 at a 14.1% discount off the closing price in a block deal. The head dealer Citigroup Global Market Equity and Morgan Stanley PE determined the discount and selling price. The trade volume hit 230.4 billion won. In addition, Morgan Stanley PE sold 2.85 million shares of Hyundai Rotem at a total price of 48.5 billion won in January this year.
In 2006, Morgan Stanley PE acquired 42.36% of Hyundai Rotem shares for 203.8 billion won (7,527 won per share, a total of 27.08 million shares). In 2013, 6 million of these shares were sold as sales of existing shares to public in an initial public offering (IPO). The offering price at the time was 23,000 won per share. Excluding the short period following the IPO, the share price stayed lower than the offering price. Morgan Stanley PE was the second largest shareholder stuck in a safety-net deposit for six months since the IPO and failed to find an ideal timing to sell off its shareholdings.
The share price in January, when Morgan Stanley PE disposed of Hyundai Rotem shares for the first time since its IPO, was far lower than the offering price. The sales volume was minimized to 50 billion won. Yet subsequent events such as inter-Korean Summits boosted Hyundai Rotem share prices, helping Morgan Stanley PE earn more than a 200% profit through three block deals 5 years after its investment.