Mando Corp. (060980), the largest unit of South Korea’s Halla Group, plans to raise about 250 billion won ($223 million) from an initial public offering in Hong Kong of its Chinese unit, two people familiar with the matter said.
The company plans to sell new stock equivalent to a 25 percent stake during late November and price the shares to value Mando China Holdings Ltd. at about 1 trillion won, said the people, who asked not to be identified because the plans haven’t been made public. Morgan Stanley (MS) and Deutsche Bank AG are handling the deal, they said.
The proceeds may help Mando, Korea’s second-largest auto- parts maker, raise funds for a possible purchase of former affiliate Halla Climate Control Corp. (018880) from Visteon Corp. (VC) Mando said in August it may offer to buy Visteon’s 70 percent stake in Halla Climate.
Spokesmen at Mando said they couldn’t immediately comment.
The Korean company established Mando China Holdings last month by reorganizing eight affiliates in China, according to a regulatory filing on Sept. 3.
UBS AG (UBSN) analysts wrote earlier this month that the China affiliates will account for 18 percent of Mando’s total revenue and 32 percent of its operating profit in 2012. Mando China’s listing could help strengthen the parent company’s balance sheet and lower financial expenses, they wrote in a Sept. 3 report.
Halla Group Chairman Chung Mong Won, who’s also chairman of Mando, has been seeking to rebuild the group, which went bankrupt in 1997 after years of overexpansion saddled it with at least 6.5 trillion won in debt. Chung regained control of Mando in 2008 after Halla Group sold the company in 1999 following the Asian financial crisis.
Visteon, the U.S. auto-parts maker that was spun off from Ford Motor Co. (F) in 2000, in July failed in an attempt to buy the remaining 30 percent of Halla Climate after South Korea’s National Pension Service, which owns 8.1 percent of Halla Climate, rejected the U.S. company’s offer. The pension fund also reached a preliminary agreement to give Mando preferential rights to bid for the fund’s stake in Halla Climate.
Visteon said this week that it plans to sell its climate business to Halla Climate for cash, creating the Halla-Visteon Climate Group.
The move, which Visteon wants to complete in the first quarter of next year, will make the combined entity “predator not prey” in the industry, Tim Leuliette, Visteon’s interim chief executive officer, said at an investor conference in Boston. Customers have wanted such consolidation for more than a decade and the transaction won’t be subject to a shareholder vote, he said.
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