LB Investment Bets 29.5 Billion KRW on Art Auction House K Auction

LB Next Unicorn Fund Fully Acquires KRW 29.5 Billion of K Auction CB
Focus on Potential Increase in Corporate Value

[Asia Economy Reporter Kwangho Lee] Art auction company K-Auction announced on the 24th that it has decided to issue the first private convertible bonds (CB) worth 29.5 billion KRW. Shin Young Securities is participating as the lead underwriter.

LB Next Unicorn Fund, managed by LB Investment, is expected to solely acquire the entire 29.5 billion KRW of the CB. The LB Next Unicorn Fund is a large blind fund worth 310.6 billion KRW, with the National Pension Service as its largest contributor.

This CB is unusual for a mezzanine issuer in the KOSDAQ market in that the put option can be exercised after 3 years. It does not include adjustments to the conversion price based on market price (Refixing) or call options for early acquisition of CBs by the company or investors.

A K-Auction official stated, “K-Auction’s decision not to use the funds raised from this CB issuance to expand the controlling power of major shareholders but solely for the company’s growth demonstrates our commitment,” adding, “LB Investment, as the investor, has responded by focusing solely on the potential increase in K-Auction’s corporate value.”

An LB Investment official said, “The business capabilities of K-Auction centered on K-Office, the stock price undervalued relative to fundamentals, K-Auction’s investor-friendly approach, management transparency, and deep understanding of the art distribution market all influenced this investment decision,” and added, “We look forward to various collaborations with K-Auction following this CB investment.”

K-Auction’s cash and cash equivalents amount to 27.1 billion KRW, and its debt ratio is only 59.46%. This investment was attracted to proactively secure flexible operating funds to be used when investments are needed in art asset sales, which contribute significantly to sales, or in future new business areas.

In fact, K-Auction showed in its first half performance disclosure that the sales growth of its subsidiary Art Native is gaining momentum, and through another subsidiary, Arte K, it successfully held an exhibition at The Hyundai Seoul, part of the Hyundai Department Store Group, in the first half of this year, with plans to hold the same exhibition again in the second half.

A K-Auction official said, “Given CEO Doh Hyun-soon’s previous experience in global bond financial markets at the Bank of Korea’s foreign exchange operation and Hong Kong’s Lehman Brothers, as well as financial industry restructuring consulting at McKinsey & Company, which is close to consulting or financial investment industries, investment in fields related to art information provision or new business areas cannot be ruled out.”

Doh Hyun-soon, CEO of K-Auction, said, “Since our listing earlier this year, we have announced a dividend policy for shareholder returns and conducted a shareholder-allocated bonus issue to grow together with our shareholders,” adding, “We will not stop there but will accelerate growth through this CB issuance and share the fruits of growth with shareholders, investors, and the company.”

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