Making a rare appearance as the head of the nation’s fifth-largest conglomerate, chairman Shin Dong-bin met top investors in the country Monday, vowing to improve the transparency of Lotte Group’s governance structure.
At an investor relations forum held a month prior to the planned listing of the group’s hotel unit on June 29, Shin said the company will no longer remain a private entity but become “a public and trusted firm.”
“Through the upcoming initial public offering, Lotte Group will improve its governance structure and secure transparency to become a trusted company,” he was quoted as saying by one of the participants.
“I am thinking of (establishing) an open management system. From now on, we will think highly about transparent management and strengthen our corporate responsibility on environment, society and governance structure.
Shin was speaking to around 100 chief investment officers from asset management companies and investment banks. His presence in the meeting was seen as an unusual gesture as a chaebol tycoon. Lotte officials said Shin wanted to offer a strong impression on Hotel Lotte and highlight its investment value.
Its listing on the nation’s main bourse is part of his reform plans introduced in August amid a bitter family fight over control of the retail business-focused conglomerate operating businesses both in Korea and Japan.
For Shin, making the hotel unit -- the de facto parent company of Lotte’s Korea business -- public, is about keeping a promise he made that Lotte Group belongs to Korea.
Through the offering, the stake of Lotte Japan’s affiliates in Hotel Lotte will decline from the current 98 percent to 65 percent. This would help the group wipe off its negative public image of being controlled by Lotte Japan’s affiliates, according to industry watchers.
The listing is also crucial for Shin as he seeks to cement his power in the group, not only by gaining investors’ trust but also the money the firm is expected to fetch through its market capitalization.
Hotel Lotte is expected to secure over 5 trillion won ($4.2 billion), probably the largest-ever public offering in the nation’s history after Samsung Life Insurance’s IPO fetched a record 4.9 trillion won in 2010.
In a regulatory filing on May 19, Hotel Lotte said it will offer 47.85 million shares in the range of between 97,000 won to 120,000 won per share.
With the astronomical fund, Shin is likely to invest about 2 trillion won in the hotel’s duty-free business.
Hotel Lotte is the world’s third-largest duty-free operator. Shin may seek to acquire more tax-free operators overseas to expand Lotte’s brand value to become the global No. 1.
“Duty-free operations are Hotel Lotte’s core business in terms of sales and operating profit. About 2 trillion won will be allocated for its overseas foray and M&As,” an official was quoted by Yonhap News Agency.
“The firm is in talks with an Australian tax-free operator for a possible M&A.”
By Cho Chung-un (
christory@heraldcorp.com)