이 기사는 2022년 03월 14일 06:41 thebell 에 표출된 기사입니다.

Golfzon County, a South Korean golf course operator, has delivered strong financial results for fiscal year 2021 ahead of its planned initial public offering thanks to the pandemic-driven golf boom and its proactive efforts to expand across the country.

Golfzon County recorded revenue of 268.9 billion won ($218.2 million) and operating profit of 104.8 billion won last year, up 23.7% and 69.0% respectively from the year before, according to industry sources. Net profit more than doubled to 77.7 billion won in the same period.

The company’s record results are attributed to the golf boom, with more people visiting local golf clubs due to travel restrictions caused by the Covid-19 pandemic. Golfzon County, which has been rapidly expanding its business since 2018, saw its operating profit margin jump to 40% last year from around 30%.

With the strong financial performance, the company will get a boost to its efforts to list on the Seoul bourse. It is working with NH Investment & Securities and Samsung Securities to submit a registration statement for its planned IPO to Korea Exchange, potentially in the coming weeks.

Golfzon County earlier this year refreshed its board with four new directors to enhance the board’s independence. Seo Sang-hyun, the company’s chief executive, and two officials from MBK Partners, a private equity investor in the golf operator, remain on the board.

In preparation for the IPO, Golfzon County also completed a 20-for-1 stock split in early March, which increased its total number of shares outstanding to 19,144,200. However, convertible preferred shares in the company owned by MBK Partners have not yet converted into common shares.

Convertible preferred shares

Golfzon County is 50% each owned by Golfzon Newdin Holdings, Golfzon Group’s holding company, and Korea Golf Infra Investment, a special purpose company formed by MBK Partners. The Seoul-headquartered firm invested in the golf course operator by purchasing convertible preferred shares, each of which can be converted into 10 common shares.

The conversion of all preferred shares would increase MBK Partners’ stake in Golfzon County to 68.4% while reducing the holding company’s stake to 31.6%.

But South Korean law mandates that a holding company own 20% or more of its listed subsidiary and 40% or more of its unlisted subsidiary. This means before the public listing, only part of preferred shares held by MBK Partners can be converted into common stock to be sold in the IPO.

How many shares MBK Partners will sell in the IPO will also affect investor appetite in the company. Last year, there was tepid response to deals where more than 40% of the total offering was sold by existing shareholders – including IPOs of Hyundai Engineering and Dae Myoung Energy, which ultimately pulled their offerings – underscoring increased investor caution amid higher interest rates and inflation.

As a result, it is likely that MBK Partners will keep a sizable stake in Golfzon County after the IPO. The two firms are said to be in discussions with Korea Exchange about this matter. (Reporting by Seok-cheol Choi)