IMM PE sells controlling stake in Hanatour

A sign board of Hana Tour / Yonhap

Korea's largest travel agency Hanatour has been put up on the M&A market, as IMM PE initiated procedures to sell its controlling stake of the travel company. The Seoul-based private equity firm purchased a 16.68 percent stake at the end of 2019.

According to the investment banking industry on Wednesday, an aggregated 27.78 percent stake of the travel agency — combining the 16.68 percent stake held by IMM PE and the rest owned by the travel company's co-founders — will be subject to the sale, seeking a new buyer of the shares.

Hanatour's shareholders consist of the 27.78 percent stake held by IMM PE and co-founders, followed by the National Pension Service, which holds 5.39 percent stake, and other minor shareholders who constitute an over 65 percent stake in the firm.

With the news of the upcoming sale of the travel agency, Hanatour's stock price plunged on Wednesday's trading, ending at 63,000 won, a 10.26 percent fall from the previous session.

Given the travel agency's market cap stands at slightly over one trillion won ($742 million) as of Wednesday's closing, the market value of the 27.78 percent stake is estimated to be around 280 billion won. When adding a control premium, it is expected that a higher price will be set for the sale.

IMM PE became the largest shareholder of the travel company by participating in a third-party paid-in capital increase at the end of 2019, just before the travel industry was heavily hit by COVID-19 the following year. The private equity firm injected 128.9 billion won to purchase 2.32 million shares for 55,500 won per share.

Despite Wednesday's plunge in the stock price, the private equity firm is still anticipated to gain a considerable return from both profits coming from the differences in the purchasing price as well as a control premium price.

With the demand for travel soaring, Hanatour's annual revenues posted 411.6 billion won last year, which is a 258 percent increase from the previous year. The company also succeeded at turning around its fortunes, logging an operating profit of 34 billion won.

Major online travel agencies, such as Yanolja, Hotels.com, and Booking.com, are expected to show interest in acquiring the tour company's controlling stake.