Innocean Worldwide Inc., an advertisement agency affiliated with Hyundai Motor Group, had a rough market debut Friday as its parent company and major clients' slump clouded its business outlook.
Established a decade ago to handle the global promotion of Hyundai Motor and its sister company Kia Motors, Innocean has grown into the nation's No. 2 ad agency, following Samsung's Cheil Worldwide Inc. Out of 744.7 billion won ($644.9 million) in sales last year, more than 70 percent of Innocean's revenue came from Hyundai-related businesses.
Shares of Innocean opened at 66,600 won on the main KOSPI market, below the initial offering price of 68,000 won and closed 9.16 percent down from the opening price. The benchmark index KOSPI fell 0.53 percent.
Its market capitalization came to 1.21 trillion won.
The floatation, one of the largest listings this year, came as the nation's second-largest conglomerate has been seeking to circumvent the tougher anti-trust regulations that went into effect in February to curb excessive intra-affiliate business practices.
"The offering is aimed at reducing the owner family's stakes below 30 percent in accordance with the anti-trust regulations," a Hyundai Motor official said, asking for anonymity.
Chung Sung-yi, the eldest daughter of Hyundai Motor Group Chairman Chung Mong-koo, is its largest shareholder, followed by her brother Chung Eui-son, vice chief of the nation's top automaker.
Innocean faces tough challenges ahead as Hyundai Group has been losing its market shares to Japanese rivals that have been benefiting from the lower yen.
"Worsening earnings of Hyundai Motor and its affiliates pose potential risks to its sales," NH Investment & Securities, its IPO underwriter, said. "Its operating profits can vary from year to year as global sports events usually take place every two years and demand for advertisements increases." (Yonhap)
