Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

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Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

Below is the shareholding % of Kakao Bank's pre-IPO institutional shareholders who are not locked up. Of these, Yes24 is expected to sell its stake in the short term, as it has long indicated the possibility of a sale. Also, Netmarble and eBay Korea had little business strategic reasons to hold stakes in Kakao Bank for a long period of time, so they were highly likely to sell their stake in the short term.<table class="table table-striped">
<colgroup>
<col width="100">
<col width="100">
</colgroup>
<tbody>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Kakao Bank: Pre-IPO institutional shareholders not locked up"}'>Kakao Bank: Pre-IPO institutional shareholders not locked up</td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Netmarble"}'>Netmarble (KS 251270)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.016}' data-sheets-numberformat='[null,3,"0.00%",1]'>1.60%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Skyblue Luxury Investment Pte.Ltd. (Tencent)"}'>Skyblue Luxury Investment Pte. Ltd. (Tencent)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.016037859816937956}' data-sheets-numberformat='[null,3,"0.00%",1]'>1.60%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Seoul Guarantee Insurance Company"}'>Seoul Guarantee Insurance Company</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.032075721738694905}' data-sheets-numberformat='[null,3,"0.00%",1]'>3.21%</td>
</tr>
<tr><td colspan="2"></td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Korea Post"}'>Korea Post</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.032075721738694905}' data-sheets-numberformat='[null,3,"0.00%",1]'>3.21%</td>
</tr>
<tr><td colspan="2"> </td></tr>
<tr>
<td data-sheets-value='{"1":2,"2":"eBay Korea"}'>eBay Korea</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.032075721738694905}' data-sheets-numberformat='[null,3,"0.00%",1]'>3.21%</td>
</tr>
<tr>
<td data-sheets-value='{"1":2,"2":"Yes24 (KS 053280)"}'>Yes24 (KS 053280)</td>
<td style="text-align: right;" data-sheets-value='{"1":3,"3":0.0140631228521151}' data-sheets-numberformat='[null,3,"0.00%",1]'>1.41%</td>
</tr>
<tr><td colspan="2" data-sheets-value='{"1":2,"2":"Source: DART"}'>Source: DART</td></tr>
</tbody>
</table>But Korea Post is really unexpected. Korea Post is the only major domestic pension fund to invest in Kakao Bank as an alternative investment. So far, the investment amount is about ₩92B. Through this block deal in which 90% of the holdings are sold, the rate of return is 10 times higher than the investment, even though it has provided an incredible discount rate.<hr><div class="content-highlight">OK, it is not difficult to understand that Korea Post wanted to realize a profit when the return was 10 times the investment. However, given the fund operation tendency of the Korea Post as a local pension fund, there are several questions about the size and timing of this block deal.</div>Korea Post's AUM exceeds ₩140T. Among local pension funds, it is second only to the National Pension Service in terms of size. However, Korea Post is known for its inflexible management style, even compared with local pension funds. In the case of alternative investments that include pre-IPO investment, they account for 15~16% of the total within Korea Post. But the scope of alternative investments is not wide, and the flexibility should be quite low.Then, Korea Post sold most of its shares (not just some of the shares) in Kakao Bank, which should be categorized as an asset with high long-term growth potential, immediately after listing. Yes, this is so unlike Korea Post.

Below is the shareholding % of Kakao Bank's pre-IPO institutional shareholders who are not locked up. Of these, Yes24 is expected to sell its stake in the short term, as it has long indicated the possibility of a sale. Also, Netmarble and eBay Korea had little business strategic reasons to hold stakes in Kakao Bank for a long period of time, so they were highly likely to sell their stake in the short term.





Kakao Bank: Pre-IPO institutional shareholders not locked up

Netmarble (KS 251270)
1.60%


Skyblue Luxury Investment Pte. Ltd. (Tencent)
1.60%


Seoul Guarantee Insurance Company
3.21%



Korea Post
3.21%

 

eBay Korea
3.21%


Yes24 (KS 053280)
1.41%

Source: DART

But Korea Post is really unexpected. Korea Post is the only major domestic pension fund to invest in Kakao Bank as an alternative investment. So far, the investment amount is about ₩92B. Through this block deal in which 90% of the holdings are sold, the rate of return is 10 times higher than the investment, even though it has provided an incredible discount rate.OK, it is not difficult to understand that Korea Post wanted to realize a profit when the return was 10 times the investment. However, given the fund operation tendency of the Korea Post as a local pension fund, there are several questions about the size and timing of this block deal.Korea Post's AUM exceeds ₩140T. Among local pension funds, it is second only to the National Pension Service in terms of size. However, Korea Post is known for its inflexible management style, even compared with local pension funds. In the case of alternative investments that include pre-IPO investment, they account for 15~16% of the total within Korea Post. But the scope of alternative investments is not wide, and the flexibility should be quite low.Then, Korea Post sold most of its shares (not just some of the shares) in Kakao Bank, which should be categorized as an asset with high long-term growth potential, immediately after listing. Yes, this is so unlike Korea Post.

Korea Post's Kakao Bank Block Deal, Yes, It Is Unexpected

KakaoBank

Korea Post's Kakao Bank Block Deal, Yes, It Is Unexpected