South Korea is likely to tap a global investment bank to breathe new life into the stalled $3 billion sale of its stake in NXC Corp., the holding company of the country’s leading game publisher Nexon Co., after four failed auctions under a domestic adviser.
The country’s finance ministry said Tuesday that its latest bid on the previous day to dispose of a 30.6% stake in NXC attracted no valid bids.
The shares, valued at about 4 trillion won ($2.9 billion), were transferred to the state by the family of Nexon’s late founder Kim Jung-ju to cover part of their inheritance tax bill – one of the largest in South Korea’s history.
Kim, who died unexpectedly in 2022 at the age of 54, left behind assets valued at more than 10 trillion won. His widow, Yoo Jung-hyun, inherited a 34% stake in NXC, while their two daughters each received about 31.46%.
To meet their multitrillion-won tax obligation, the family paid part of the bill in shares, leaving the government with a minority position.
A SHIFT TO GLOBAL ADVISERS
Officials are said to be seeking to relaunch the auction in the near future with a new lead adviser.
People familiar with the matter said the ministry is considering appointing a foreign investment bank with a strong track record in cross-border deals, after local broker IBK Investment & Securities Co. failed to generate sufficient investor interest.
The Korean adviser, a unit of state-owned Industrial Bank of Korea, was brought in to run the sale from the third auction, but it was widely seen as lacking experience with large, complex deals.
But even with a new foreign sale manager, challenges remain.
The stake up for sale carries no management control, as the Kim family continues to hold a majority position in NXC. Investors have balked at paying billions for what amounts to a passive financial holding, which offers little beyond dividend income.
Analysts note that for pure financial exposure, buying Nexon shares directly on the Tokyo Stock Exchange may be more attractive.
FISCAL PRESSURE MOUNTS
Seoul nevertheless has a strong incentive to persevere.
The government penciled in 3.7 trillion won of revenue from the stake sale in this year’s budget, leaving a potential shortfall if the auction continues to fail.
Officials have hinted at the possibility of revising pricing terms to make the next bid successful or exploring alternatives such as a company buyback.
Nexon, best known for titles such as MapleStory and Dungeon & Fighter, is one of Korea’s most successful gaming companies.
NXC controls nearly half of Tokyo-listed Nexon, making the stake highly visible but difficult to monetize.
By Kwang-Sik Lee and Ik-Hwan Kim
bumeran@hankyung.com
Sookyung Seo edited this article.
