[IPO Spotlight] MBK to Offer 50% Stake in 'Golfzon County' Valued at 3 Trillion Won During IPO

Golfzon County Sacheon CC

[Asia Economy Reporter Park So-yeon] Golfzon County, the No. 1 golf course operator in South Korea, is set to enter the KOSPI market in the second half of this year, while its largest shareholder MBK Partners is preparing to recover its investment through a large-scale sale of existing shares.

According to the investment banking (IB) industry on the 30th, MBK Partners plans to reduce its stake to the 20% range through the sale of existing shares and dilution from new share issuance after the listing. MBK Partners is seriously considering selling about 50% of its potential 70% stake. The plan is to establish Golfzon Newdin Holdings, the second-largest shareholder, as a solid largest shareholder with a stake in the 30% range.

Golfzon County was established in January 2018 as a spin-off of the golf course division from Golfzon Newdin Group, famous for its screen golf business. Initially, the holding company Golfzon Newdin Holdings owned 100% of the shares, but after receiving investment from the private equity firm MBK Partners, its stake has decreased to 41.6%. The largest shareholder is Korea Golf Infrastructure Investment, a special purpose company (SPC) established by MBK Partners, which holds 58.4% of common and preferred shares.

Korea Golf Infrastructure Investment holds 11,911,990 common shares and 768,697 preferred shares. The conversion ratio of preferred shares to common shares is 10 common shares per preferred share. If Korea Golf Infrastructure Investment converts all remaining 768,697 preferred shares, it will secure an additional 7,686,970 common shares. This will increase its stake from the current 58.4% to about 70%.

MBK Partners plans to adjust the shareholding structure after the listing so that Golfzon Newdin Holdings can focus on business expansion based on a solid largest shareholder position. An IB industry official said, "After the listing, Golfzon Newdin Holdings will hold a 30% stake to act as the largest shareholder, and Korea Golf Infrastructure Investment plans to sell 50% and retain only a stake in the 20% range."

Since establishing Golfzon County in 2018, MBK has invested 114 billion KRW to secure a 50% stake and has participated in four subsequent paid-in capital increases, investing a total of 288 billion KRW. Since then, Golfzon County has grown through an 'add-on' method by expanding the company size via mergers and acquisitions (M&A). The IB industry regards Golfzon County as the biggest IPO candidate in the second half of this year. Some in the industry estimate Golfzon County’s corporate value to reach around 3 trillion KRW.

This is because golf has gained popularity as a sport that small groups can enjoy outdoors during the COVID-19 pandemic, significantly broadening the base of golf participants. Although the COVID-19 pandemic situation has eased, forecasts suggest that the number of golf participants will not easily decrease, which has increased Golfzon County’s valuation.

The company acquired golf courses at low prices during 2017 when domestic membership golf courses were undergoing corporate rehabilitation procedures due to financial difficulties. Since 2018, it has consecutively acquired Lake Hills Suncheon, Seonsan CC, J’s CC, Gampo J’s CC, Namyang Leisure, and Lake Hills Gyeongnam. It also purchased shares of Hanol, which operates Sacheon CC. It operates 18 golf courses nationwide, totaling 387 holes. It holds an overwhelming No. 1 market share in the domestic market.

An industry insider said, "Even if Golfzon County is valued at 5 billion KRW per hole, the price would be about 2 trillion KRW," adding, "It has the characteristics of a golf course REIT that can continue to add golf courses using acquisition financing, so it is expected to be the biggest IPO candidate in the market in the second half of this year."

This content was produced with the assistance of AI translation services.