이 기사는 2020년 03월 04일 08:00 thebell 에 표출된 기사입니다.

South Korea’s IMM Private Equity has become the largest shareholder in the country’s leading travel agency HanaTour.

IMM PE’s 128.9 billion won purchase of new shares in the Kospi-listed company through a third-party allocation has completed on February 28, sources familiar with the matter said.

HanaTour plans to use the proceeds from the transaction to create new products for overseas travelers and upgrade its system. It also plans to use part of the money to make strategic acquisitions of overseas assets.

Going forward, IMM PE is expected to replace some of the company’s existing management and board of directors in an effort to conduct a post-merger integration. This would mark the end of HanaTour’s long-standing management system, in which three key men – including Park Sang-hwan, CEO and Chairman of HanaTour – make key business decisions.

They first met back in 1980s and founded Gookjin Travel Agency in 1993, which three years later changed its name to HanaTour. For the first time among domestic travel agencies, the company introduced a system of offering travel products through a wholesale network of franchises nationwide and internationally, which allowed it to have a dominant market share.

However, the anti-Japan boycott campaign last summer followed by the recent coronavirus outbreak hit the country’s tourism industry hard. HanaTour was no exception and its fundamental performance has significantly weakened for the past periods.

As the situation worsened, IMM PE adjusted its valuation for the company, lowering a premium to the company’s reference share price from 16.3 percent to 11.3 percent. The change consequently downsized the transaction value from 134.7 billion won to 128.9 billion won. This was a proactive move to reflect the expected lower earnings, the firm explained, adding that no significant issues like contingent liabilities have been discovered during due diligence.

“Many PE firms are reluctant to adjust their valuation once it’s been disclosed, because this means they admit their previous valuation was faulty,” an industry insider said. “Nonetheless, [IMM PE] appears to have decided that taking action was a better option due to high volatility in the agency’s earnings of late.”

Some industry watchers expect that HanaTour – with new capital secured from IMM PE – could be one of the few that survive, with many other domestic travel agencies currently at risk of bankruptcy.

According to data compiled by a local travel agency, the number of package travellers in January fell 18 percent year-on-year as many people canceled tour packages products amid growing concerns about the spread of the coronavirus. Industry observers expect that such a mood to last for the next couple of months.

(By reporter Rho Ar-rum)