Asia's biggest international equity deal of the year will come from its most closed and parochial market. State-owned telecommunications company Korea Telecom, which has annual revenue of w5.71 trillion ($7.2 billion) and assets of W11.6 trillion, wants to raise up to $2 billion. With the Korean stock market suffering from political instability and restrictive practices, the government may have no choice but to make its first-ever foray into international capital markets when undertaking a privatization.
Speculation about the deal has thrown an unaccustomed spotlight on a market often overlooked in favour of more racy Asian bourses. "This could easily be the single-biggest transaction of the year," says Andrew Harrington, regional telecommunications analyst at Salomon Brothers in Hong Kong. "With [the stock market's] free float of shares estimated to be worth around $20 billion, it would account for around 10% of total market capitalization," says Namuh Rhee, a director of Dongbang Peregrine Securities in Seoul. "And this would make it the second-largest company on the Korea Stock Exchange (KSE)." Adds Adrian Cowell, chief representative of Kleinwort Benson in Seoul: "It is undoubtedly the deal everyone is awaiting."
The government is keen to accelerate what has been a much-delayed privatization programme.