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Sat, Jan 28, 2006 - Page 6 News List

Lotte Shopping's IPO the biggest ever in South Korea


South Korean retail giant Lotte Shopping Co's initial public offering yesterday marked South Korea's largest IPO ever as well as the biggest in the global retail sector, people familiar with the deal said.

Lotte Shopping is set to raise a total of 3.43 trillion won (US$3.53 billion) by offering 6.86 million shares overseas and 1.71 million shares in South Korea to fund expansions and pay debt. The shares will be offered from Wednesday through Friday and listed as early as Feb. 9 in London and Seoul.

Lotte Shopping, South Korea's top department store chain, operates 19 Lotte Department Stores and 43 discount stores as well as supermarkets. The company is preparing to spread its wings into overseas markets, beef up its discount store operations and strengthen its new business areas such as cinema chains.

The company is a unit of the family-owned Lotte Group conglomerate, South Korea's seventh-largest business group in terms of assets, according to the country's Fair Trade Commission.

A person familiar with the deal and an official at joint deal underwriter Goldman Sachs told Dow Jones Newswires that the IPO was priced at 400,000 won per share.

The previous biggest IPO worldwide by a retail company was the US$2.44 billion offering in July 2000 by Japanese convenience store chain Lawson Inc.

Last week, Lotte Shopping said it plans to use the proceeds from the local IPO to set up 12 outlets of its discount store Lotte Mart in South Korea, and to repay maturing debt worth 100 billion won.

The massive initial share offering is expected to become a catalyst to attract more investors both at home and overseas into South Korea's retail sector, said Lee Sang-koo, an analyst at Hyundai Securities.

"Lotte's entrance grows the retail sector's portion in the local stock markets by 2 percentage points, and the solid earnings momentum given the improving consumption trend suggests that this is the right time to buy local retail shares," Lee said.

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