By Chung Ah-young
The initial public offering (IPO) price for Samsung SDS, an IT affiliate of Samsung Group, is expected to be set between 150,000 and 190,000 won, analysts said Tuesday.
The IPO is to secure funds for the company's global expansion and accelerate a restructuring drive in Samsung Group as its owner prepares to hand over control of the nation's top conglomerate to his heirs.
The company is expected to sell about 5.4 million existing shares or 7 percent of all 77 million shares to the public between Nov. 3 and 7.
Samsung SDS share prices closed at 323,000 won on the Korea over-the-counter (K-OTC) market run by the Korea Financial Investment Association.
The final IPO price will be decided after the Financial Supervisory Service (FSS) reviews an application submitted by the company based on the demand forecast by institutional investors.
Samsung SDS wrote the IPO price between 150,000 and 190,000 won in its application with the financial watchdog, sources said.
At a price of 190,000 won, the market capitalization of the company will be valued at 14.7 trillion won, making it the 14th largest company on the main bourse.
However, if the IPO price is set at 200,000 won or above on prediction of strong demand from institutional investors, it may trigger overvaluation concerns.
It often sees a drop in the stock price below the public offering price after the company goes public, causing short-term losses to investors.
"The IPO price is usually decided on the expected price band because it is free from its overpriced controversy and expects the rise in the stock prices after the IPO," said an official of an asset management firm.
The offering will likely be the biggest IPO in the nation's history as many companies have withdrawn their listing plans amid the sluggish stock market.
Samsung Electronics, the world's largest smartphone maker, is the biggest shareholder of SDS with a 22.58 percent stake, followed by building and trading unit Samsung C&T Corp with 17.08 percent and Samsung Electronics Vice Chairman Lee Jay-yong, who has 11.25 percent. Samsung Electro-Mechanics owns 7.88 percent.
Samsung Electro-Mechanics recently announced that it will sell its entire stake in SDS when it goes public in November.
According to chaebol.com, a research institute that monitors conglomerates' business activities, if the public offering price is set at 190,000 won, the values of the stakes owned by Samsung Electronics and Samsung C&T Corp are expected to stand at 3.3 trillion won and 2.5 trillion won respectively. Vice Chairman Lee's stake in Samsung SDS is expected to reach 1.6 trillion in this calculation.
If the stock prices rise after the IPO, their stake values are expected to skyrocket even more.
Samsung SDS provides various IT and tech services for Samsung Electronics and other Samsung affiliates. It aims at mergers and acquisitions and partnerships both at home and abroad for new technology and solutions to enhance competitiveness in fields such as mobile, cloud, big data and online security.
The initial public offering (IPO) price for Samsung SDS, an IT affiliate of Samsung Group, is expected to be set between 150,000 and 190,000 won, analysts said Tuesday.
The IPO is to secure funds for the company's global expansion and accelerate a restructuring drive in Samsung Group as its owner prepares to hand over control of the nation's top conglomerate to his heirs.
The company is expected to sell about 5.4 million existing shares or 7 percent of all 77 million shares to the public between Nov. 3 and 7.
Samsung SDS share prices closed at 323,000 won on the Korea over-the-counter (K-OTC) market run by the Korea Financial Investment Association.
The final IPO price will be decided after the Financial Supervisory Service (FSS) reviews an application submitted by the company based on the demand forecast by institutional investors.
Samsung SDS wrote the IPO price between 150,000 and 190,000 won in its application with the financial watchdog, sources said.
At a price of 190,000 won, the market capitalization of the company will be valued at 14.7 trillion won, making it the 14th largest company on the main bourse.
However, if the IPO price is set at 200,000 won or above on prediction of strong demand from institutional investors, it may trigger overvaluation concerns.
It often sees a drop in the stock price below the public offering price after the company goes public, causing short-term losses to investors.
"The IPO price is usually decided on the expected price band because it is free from its overpriced controversy and expects the rise in the stock prices after the IPO," said an official of an asset management firm.
The offering will likely be the biggest IPO in the nation's history as many companies have withdrawn their listing plans amid the sluggish stock market.
Samsung Electronics, the world's largest smartphone maker, is the biggest shareholder of SDS with a 22.58 percent stake, followed by building and trading unit Samsung C&T Corp with 17.08 percent and Samsung Electronics Vice Chairman Lee Jay-yong, who has 11.25 percent. Samsung Electro-Mechanics owns 7.88 percent.
Samsung Electro-Mechanics recently announced that it will sell its entire stake in SDS when it goes public in November.
According to chaebol.com, a research institute that monitors conglomerates' business activities, if the public offering price is set at 190,000 won, the values of the stakes owned by Samsung Electronics and Samsung C&T Corp are expected to stand at 3.3 trillion won and 2.5 trillion won respectively. Vice Chairman Lee's stake in Samsung SDS is expected to reach 1.6 trillion in this calculation.
If the stock prices rise after the IPO, their stake values are expected to skyrocket even more.
Samsung SDS provides various IT and tech services for Samsung Electronics and other Samsung affiliates. It aims at mergers and acquisitions and partnerships both at home and abroad for new technology and solutions to enhance competitiveness in fields such as mobile, cloud, big data and online security.
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