By Lee Hyo-sik
Shinsegae Group, a retail-focused family-controlled conglomerate, is rushing to secure cash to expand duty free and other businesses in a bid to find a breakthrough amid the prolonged domestic consumption slump.
Shinsegae, the group’s department store unit, said Friday that it had sold 3 million Samsung Life Insurance shares in a block deal, Thursday, at 109,200 won a share, raising 327.6 billion won. The group’s discount store franchise, E-Mart, also sold 3 million shares, securing the same amount of cash.
Group officials said sovereign wealth funds and other foreign investors purchased 74 percent of the 6 million Samsung Life shares, while domestic institutional investors bought the remaining 26 percent.
Following the sale, Shinsegae’s stake in the country’s largest life insurer dropped to 2.19 percent, while E-Mart now holds 5.88 percent.
“We disposed of 6 million Samsung Life shares and raised 655.2 billion won in cash,” a Shinsegae Group spokesman said. “We will spend the money to improve the financial health of our affiliates and to make inroads into new businesses, such as multi-purpose shopping malls.”
Industry watchers speculate that Shinsegae sold the Samsung Life shares to raise cash to finance its expanding duty-free business. The group operates two duty-free shops in Busan and will open a shop at Incheon International Airport in September.
It announced a plan Thursday to turn its department store building in downtown Seoul into a duty free shop if it wins a license in June. Shinsegae, Lotte, Shilla, Hyundai Department Store and many others are vying to secure the right from the government to run a duty-free store in the capital city.
Over the past few years, the duty-free business has emerged as a cash cow because of the surging number of Chinese and other foreign tourists who purchase cosmetics and other fashion and household items.
In 2014, duty-free shop operators had a combined 8.3 trillion won in sales, up from 6.8 trillion won in 2013.
Shinsegae also needs cash to finance its takeover of Dongbu Express and other companies. The group has been seeking to acquire Dongbu, which owns an 11 percent stake in the Seoul Express Bus Terminal in southern Seoul, where Shinsegae operates a large-scale department store.
The disposal of Samsung Life shares has also raised the possibility that Shinsegae is distancing itself from Samsung Group. Shinsegae Vice Chairman Chung Yong-jin is a nephew of Samsung Electronics Chairman Lee Kun-hee.
In a similar move, Chung sold 48,500 shares in Samsung Electronics in the second half of 2014, raising about 60 billion won, according to the Financial Supervisory Service. His stake in the electronics firm declined to 0.17 percent from 0.2 percent.
The vice chairman has reportedly been amassing cash to succeed management from his mother and group Chairwoman Lee Myung-hee. Chung is expected to pay up to 800 billion won in gift tax when he inherits his mother’s stakes. Lee holds a 7.32 percent stake each in Shinsegae and E-Mart.