이 기사는 2020년 01월 08일 08:00 thebell 에 표출된 기사입니다.

JP Morgan has increased its stake in South Korean travel agency Modetour, narrowing the gap with Woo Chong-woong, the company’s chairman and the largest shareholder.

JP Morgan has raised its stake in Modetour to 6.40 percent, industry sources said on January 2. Two affiliates of the U.S. bank – JP Morgan Asset Management U.K. and JP Morgan Asset Management Asia Pacific – have recently bought shares of the KOSDAQ-listed company in the open market.

JP Morgan has been a shareholder of the travel agency since 2015. The recent increase in its stake in Modetour allowed the bank to narrow the gap with Chairman Woo, who holds a 10.87 percent stake, to as little as 4.47 percentage points, making it the second largest shareholder.

This has garnered more attention from market participants after IMM Investment’s recent investment in Hanatour Service, another local travel agency. Last month, Hanatour decided to issue more than 2.32 million common shares in a secondary offering, all of which have been agreed to be bought by IMM Investment. The deal, which is expected to complete in February, would make the South Korean private equity firm the largest shareholder of Hanatour.

Financial investors’ increasing interest in domestic travel agency companies has likely to do with poor performance of travel stocks. Last year, the domestic travel industry saw earnings drop overall in the aftermath of South Korea’s campaign to boycott tours to Japan amid worsening relations between the two countries. As a result, shares of most of the local travel agencies declined significantly, with financial investors seemingly taking advantage of lower prices to increase their stake.

The increase in JP Morgan’s stake in Modetour is unlikely to threaten control of the company for the time being, as the bank has been considered an ordinary investor with no intention of participating in the company’s management. Modetour has also defended control through continued share repurchases during last year. Chairman Woo and senior management specially related with him are estimated to have a controlling voting power in the company.

Still, financial investors could attempt to exert influence in management with their increased stake in companies in the travel industry. Indeed, IMM Investment is set to gain three board seats at Hanatour upon the completion of the transaction. With this change, there is also a possibility that Kiwoom Private Equity and Kiwoom Securities, the travel company’s third largest shareholder with an 8.6 percent stake, could engage more in management.

“[Domestic] travel companies could be potentially targeted by financial investors with plenty of cash, as their share prices are very low,” said an analyst. “Homegrown and overseas private equity firms should see this as an opportunity to acquire additional stakes in South Korean travel companies that have potential for improved fundamentals.”

Meanwhile, travel industry insiders are watching for whether Modetour will take additional action to solidify control of the company. They also see that it is possible for the travel company to partner with financial investors, as its peer Hanatour did, to raise large funds for business expansion.

“We don’t know whether President Woo will buy additional shares of the company as an individual,” a Modetour representative said. “Currently we don’t have any plan to issue convertible bonds or new shares in a secondary offering like peers,” he added.

(By reporter Lee Choong-hee)