LG Logistics Company Pantos, Listing Speculation Resurfaces

[Asia Economy Reporter Koh Hyung-kwang] Speculation about the IPO of Pantos (formerly Bumhan Pantos), which had been quiet for a while, is resurfacing. This comes as LG Group’s logistics company Pantos recently announced the recruitment of experienced personnel responsible for its initial public offering (IPO).

According to industry sources on the 28th, Pantos recently posted a job opening on its website seeking experienced hires. The job description for these experienced positions specifically mentioned responsibilities such as "pre-IPO preparation and disclosure response" and "post-IPO management," drawing attention. This has led to speculation in the securities industry that Pantos may have begun preliminary preparations for an IPO.

Rumors about Pantos going public have been ongoing since LG Group acquired the company in 2015. However, LG has repeatedly denied these rumors, stating that while an IPO is under consideration, the timing is undecided. This time as well, LG confirmed that "it is true that we are hiring personnel with IPO experience," but emphasized that "the timing of the IPO has not yet been concretely decided."

The first IPO rumors emerged in 2015. At that time, Pantos’ largest shareholders were former Bumhan Pantos Vice President Koo Bon-ho, the sixth cousin of the late LG Group Chairman Koo Bon-moo, and his mother, Jo Won-hee, Chairwoman of Redcap Tour, who together held 97% of the shares.

In May 2015, LG Corporation acquired 51% (1.02 million shares) of their stake for 314.7 billion KRW, becoming the largest shareholder. LG Group positioned Pantos as a subsidiary of LG Corporation to leverage synergies between its general trading and logistics businesses. At that time, the fourth-generation owners of the group, including LG Group Chairman Koo Kwang-mo, who was then an executive director, purchased 19.9% (398,000 shares) of Pantos for 122 billion KRW. Since then, Pantos has been mentioned as a source of succession funds for Chairman Koo, sparking IPO rumors.

In the second half of 2018, LG signed a contract to transfer 19.9% of shares held by related parties to Mirae Asset Daewoo Private Equity Fund (PEF) for 145 billion KRW (36,432.2 KRW per share). LG Group explained that this sale was intended to simplify the investment structure from the holding company ㈜LG to LG Corporation and then to Pantos. Despite concerns that Mirae Asset’s holding of Pantos shares might be a move anticipating future IPO gains, no significant developments followed.

Meanwhile, Pantos’ corporate value steadily increased. Before LG’s acquisition, its sales were about 2 trillion KRW, and operating profit was around 50 billion KRW. After becoming part of the group, Pantos established itself as a core logistics company and continuously improved its performance. Five years later, last year, its sales reportedly exceeded 4 trillion KRW, and operating profit surpassed 100 billion KRW. Both sales and operating profit doubled since joining LG. An industry insider noted, "The considerable disappointment of former major shareholder Chairwoman Jo Won-hee, who essentially had to hand over Pantos to LG Group, is not unrelated to this."

There is also speculation that now is the right time for an IPO given Pantos’ solid growth. Ryu Je-hyun, a researcher at Mirae Asset Daewoo, said, "The logistics division accounts for more than 80% of LG Corporation’s total operating profit, highlighting Pantos’ growing position," adding, "Considering Pantos’ performance trends, expectations for an IPO are indeed high." Yoo Jae-sun, a researcher at Hana Financial Investment, explained, "As of the end of September last year, the book value of Pantos’ 51% stake was 417 billion KRW, so the total book value is estimated to be around 800 billion KRW," and added, "If Pantos goes public, it is expected to be valued higher than this minimum."