이 기사는 2021년 09월 06일 07:38 thebell 에 표출된 기사입니다.

Lotte Engineering & Construction (Lotte E&C) may be the next possible candidate for an initial public offering (IPO) after Lotte Rental and Lotte Data Communication made their market debuts.

It is considered the right timing for Lotte E&C to go public after its several failed attempts thanks to a booming construction industry. Goldman Sachs and NH Investment & Securities, which were selected as Lotte E&C’s underwriters during its previous attempt in 2008, retain their roles.

Other South Korean builders, including Hyundai Engineering, SK Ecoplant, and GS Inima Environment, also plan to go public this year to benefit from a booming housing construction market. Hoban Construction and Hanyang also reportedly aim to make their market debuts next year.

Lotte E&C is showing stable financial performance, with its operating profit increasing 34.6% in the second quarter from a year ago. The value of orders received was also up 18.5% on-year in the first half of this year.

“Underwriters have not received any official requests for a review on Lotte E&C,” said an industry source. “But, market insiders think that the company may miss its IPO timing forever as the market is currently witnessing expansion of housing supply and abundant liquidity at the same time.”

Lotte Group is considered to have the largest number of potential IPO candidates among South Korean conglomerates. Lotte Cultureworks, Korea Seven, and Lotte E&C have long been mentioned as possible candidates along with Hotel Lotte. Lotte Homeshopping, Lotte Global Logistics, and Lotte GRS may also go public.

Hotel Lotte is a de facto holding company of Lotte Group. Even after the group converted into the holding company system by listing Lotte Corp in 2017, many affiliates, including Lotte Property & Development, Lotte Aluminum, Lotte Rental, and Lotte E&C, remain under Hotel Lotte’s control.

The problem is that Lotte Holdings Japan, Kojunsha, and L Investment own more than 99% stake in Hotel Lotte.

The group needs to reduce a stake in Hotel Lotte owned by Lotte Japan through a listing of Hotel Lotte to complete its holding company structure.

Hotel Lotte is currently in a difficult position to make its market debut due to its weak financial performance, recording an operating loss of 170 billion won ($147 million) in the first half. Hotel Lotte has to increase its corporate value by listing shares of companies under its wing.

Currently, Lotte E&C is 43.79% owned Lotte Chemical and 43.07% owned by Hotel Lotte. “As of now, nothing has been decided about listings of other affiliates,” said an official at Lotte Group. (Reporting by Jin-young Ko)