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Hyundai Motor Vice Chairman Chung Eui-sun, the only son and heir apparent of Group Chairman Chung Mong-koo, currently holds a 10 percent stake in Innocean, and his elder sister Chung Sung-yi, an advisor for the advertising agency, holds 40 percent.
When the company goes public, Eui-sun is widely expected to dispose of his 10-percent stake in order to raise cash to buy more shares in Kia Motors and Hyundai Mobis, two of the three key units of Hyundai Motor Group.
As a result, the vice chairman will then have a stronger grip on the group's automobile business, while his sister will run the group's advertising unit.
According to Hyundai Motor and Innocean, Wednesday, the advertizing company sent a request for a proposal (RFP) to a dozen Korean and non-Korean securities companies and investment banks to find a manager to facilitate its initial public offering (IPO). "We already sent a RFP to securities firms interested in handling our IPO. We plan to select the manager as soon as possible,'' said an official at Innocean Worldwide, who declined to be named. "We haven't decided exactly when to go public. We will continue the discussion.''
Given Innocean's stellar performance over the past few years, market observers expect it won't take long for the firm to make an IPO, adding that its shares will be listed on the nation's main KOSPI market early next year. Its value is estimated at about 1.5 trillion won ($1.4 billion).
The official said the company decided to go public to make its corporate structure and decision-making process more transparent in line with its rapid growth in recent years. "The year 2015 will be our 10th anniversary. To become a global advertizing firm, we think it is necessary for us to be listed on the market. More clients and investors will then know about Innocean, and may want to do business with us.''
Innocean has expanded rapidly over the past decade as it took almost all orders from Hyundai Motor and other group affiliates. In 2013, it earned 656 billion won in revenue and had an operating profit of 90 billion won.
Whenever the firm is listed, Eui-sun is widely expected to dispose of his 10-percent stake. In August, he sold a 30-percent stake which raised 300 billion won or 555,556 won per share. This has increased speculation he would step away from the advertizing firm, instead having his elder sister take full control.
According to a person familiar with the matter, Eui-sun will then likely spend the money to buy more shares in Kia Motors and Hyundai Mobis to solidify his control in the country's second-largest conglomerate.
''Innocean's IPO signals that Hyundai Motor Group has begun realigning its structure to facilitate its third-generation succession, much like the Samsung Group. Further changes will take place in the coming months,'' he said.
In the meantime, Hyundai Motor Group is considering buying back GE's stakes in Hyundai Capital and Hyundai Card.
In 2004, GE bought a 43-percent stake in Hyundai Capital for 620 billion won. A year later, it purchased a 43-percent stake in Hyundai Card for 678.3 billion won.
The group has selected investment bank JP Morgan, law firm Yulchon and accounting firm Samjong KPMG to have them manage its possible stake buyback.
''We have maintained a decade-long partnership with GE. But both sides will have to decide soon whether to renew or end our agreement,'' a Hyundai Motor spokesman said. ''We haven't been officially notified yet by GE, but we heard that GE does not want to extend the partnership. This would mean disposing its stake in the two financial units."
He said the company will not rush to judgment, stressing that it will take enough time before deciding what to do.
Hyundai Capital is Korea's largest finance house with assets of 22.1 trillion won. Hyundai Card has 12 trillion won in assets, making it one of the nation's three largest card firms.
