HYBE Chairman Bang accused of pocketing $285 million in 'undisclosed' deal

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HYBE Chairman Bang accused of pocketing $285 million in 'undisclosed' deal

Published: 02 Dec. 2024, 18:51 Updated: 02 Dec. 2024, 19:23

LEE JAE-LIM
[email protected]

Audio report: written by reporters, read by AI

HYBE founder and Chairman Bang Si-hyuk [YONHAP]

Korea’s financial regulator is assessing whether any illegalities were involved in HYBE’s initial public offering (IPO) following reports that founder and Chairman Bang Si-hyuk reaped 400 billion won ($285 million) through undisclosed shareholder agreements with private equity funds (PEFs).

The Financial Supervisory Service (FSS) is examining the act for potential violations of the Capital Markets Act and unfair trading practices, an agency spokesperson told the Korea JoongAng Daily on Monday.

The controversy arose from recent media reports that while Bang and the firms involved in the contract had profited from the entertainment giant's 2020 IPO, individual shareholders lost out. HYBE shares plummeted 60 percent in a week following the company's stock market debut.

Bang entered shareholder agreements with PEFs, including Stic Investments, Estone Equity Partners and New Main Equity, during the listing process. If the IPO failed, Bang would repurchase PEF-owned shares under a put option clause; if the IPO succeeded, he would receive 30 percent of the capital gains generated from the sale of those shares.

HYBE’s IPO succeeded accordingly and Bang reportedly made 400 billion won.

Further details of the agreement were neither disclosed during the IPO process nor mentioned in the securities registration statement, leading to claims that it has led to losses for early investors who were unaware of such terms.

HYBE debuted on the Kospi on Oct. 15, 2020 with an initial share price of 270,000 won, double its IPO price of 135,000 won. It reached 351,000 won at peak trading and closed at 258,000 won. However, shares plunged to 140,000-won range after two weeks.

HYBE denied allegations of illegal behavior via electronic disclosure on Friday.

“Our company provided the shareholder agreement in question to the IPO underwriters during the listing preparation process,” HYBE said, adding that the underwriters had reviewed the agreement accordingly.

HYBE shares fell 2.77 percent from the previous trading day to close at 189,800 won on Monday.

BY LEE JAE-LIM [[email protected]]