Nexon's headquarters in Pangyo, Gyeonggi Province / Courtesy of Nexon
A 29.3 percent stake in NXC, the holding company of gaming giant Nexon, is poised to impact Korea's national budget for next year. The government, which currently holds the stake and plans to sell it, has already factored in an additional 3.7 trillion won ($2.65 billion) in projected 2025 revenues, assuming the sale is completed within this year.
However, market observers remain doubtful that the deal will be finalized within the expected timeline, citing the government's two previous failed attempts to complete the sale.
Korea Asset Management Corp. (KAMCO), which oversees government-owned assets, said it posted an open bid in early October to select a lead manager for the sale of the NXC stake. However, the bid closed recently without a selection being made.
Related laws stipulate that the government's competitive bidding process is valid only when at least two participants are involved, but only one brokerage participated in the bid. As a result, KAMCO posted another open bid on Nov. 22 seeking a lead manager.
The government acquired the NXC stake after the family of Nexon's founder transferred the shares as part of the inheritance tax payment following Kim Jung-ju's death in 2022.
At the time, the government valued the stake at 4.7 trillion won by calculating the company's net asset value and adding a premium of 800 billion won for the company's managing rights, despite the fact that it is not a controlling stake.
Due to this pricing, KAMCO's two previous auctions last year failed to attract any bids. Since NXC is not a listed company, there is no direct price reference, but the market considers the valuation overinflated. This is because a buyer would have to pay an additional 800 billion won for managing rights that cannot actually be exercised, given that the government does not hold a controlling stake.
Minister of Economy and Finance Choi Sang-mok, right, listens to Second Vice Minister of Economy and Finance Kim Yoon-sang during a National Assembly meeting in Yeouido, Seoul, Nov. 6. Yonhap
Against this backdrop, the government has set a target of 3.7 trillion won in non-tax revenue from the sale of the NXC stake in its 2025 budget plan. This suggests that the government aims to achieve this goal either by selling the entire stake at a discounted price or by breaking it into smaller parts for sale.
During a National Assembly meeting on Nov. 6, Second Vice Minister of Economy and Finance Kim Yoon-sang said the government had included "about 80 percent of the NXC stake (it holds)" in the budget, taking into account the possibility of a partial sale
“If we do not add the revenue from the NXC stake into the budget, it may mislead (the market and the public) that the government has no intention to sell the stake,” Kim said.
However, the National Assembly has expressed skepticism about the sale. In its recent review of the 2025 budget, the Assembly's Special Committee on Budget and Accounts identified the NXC stake sale as a potential risk.
“The government has included the NXC stake sale worth 3.7 trillion won in its 2025 non-tax revenue budget proposal,” the report reads.
“However, purchasing the whole stake would not grant management control (of the company) and NXC is an unlisted private company, making its shares difficult to sell, and the company has no plan to go public. These factors suggest that the sale of such a large stake, valued at 3.7 trillion won, is unlikely to proceed smoothly, posing a risk of significant losses for the government.”
If the government fails to sell off its NXC stake, the country's national revenue for 2025 will decline from 651.8 trillion won to 648.1 trillion won, widening the fiscal deficit to 3.1 percent of gross domestic product.