Samsung SDS in talks with Goldman Sachs for IPO

Samsung SDS plans biggest IPO in Korea for two years reports Cho Mu-hyun from ZDNet Korea.
Written by Cho Mu-Hyun, Contributing Writer

Samsung SDS, the IT service providing arm of Samsung Group, which plans to go public this year, will choose Goldman Sachs and two other securities firms to manage what is expected to be the biggest initial public offering (IPO) in Korea in recent years.

The company sent out requests for proposals (RFP) to 15 Korean securities firms and 7 foreign ones last week on Friday, sources familiar with the matter told ZDNet Korea.

Samsung SDS will choose two foreign securities firms and one Korean firm to manage the deal, they said. The deadline for proposals is May 16, while the window for the “beauty parade,” - the presentations from potential clients - will kick off on May 19.

JP Morgan and Morgan Stanley are also in talks with Samsung, the sources said.

“There hasn’t been a big IPO in almost two years and this will be a much-needed watershed to the Korean financial market,” said one of the sources, who declined to be named due to the sensitivity of the issue. “None of the large conglomerates has initiated an IPO in nearly two years. SK and Hyundai all backed down in their recent initiatives.”

The company, which is Korea’s largest manager of data, announced in a surprise press briefing on May 8 that it will go public. Investment banks will likely set the price offering around 200,000 won ($195), said market analysts.

The IPO is seen as a way for Samsung Group to secure cash for the company’s biggest shareholder, Samsung Electronics Vice Chairman Jay Lee, the son of Chairman Lee Kun-hee and heir-apparent, to pay inheritance tax. The younger Lee has 11.25 percent in shares of the company, which will be worth 1.3 trillion won ($1.2 billion) if the offering succeeds, market analysts say.

Samsung Electronics Chairman Lee Kun-hee, left, and his son and heir-apparent to the group, Vice Chairman Jay Lee

Samsung's Future Strategy Office, the control-tower of the entire group, is overseeing the move, they said.

The older Lee, who is worth 12.9 trillion won ($12.6 billion), according to Chaebul.Com, a conglomerate research agency, will likely have to pay between 3 to 5 trillion won in taxes to give his large fortune to his son under Korean financial law, said a Samsung official, who requested anonymity.

The chairman’s daughters, Lee Boo-jin, CEO of Hotel Shilla, and Lee Seo-hyun, CEO at Samsung Everland, will also benefit from the IPO as they each own 3.9 percent in shares of Samsung SDS.

A Samsung SDS spokesman declined to comment on which securities firms the company is in talks with. 

Source: ZDNet Korea (https://www.zdnet.co.kr)

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