South Korea's Hyundai Rotem jumps 66 percent on debut after $587 million IPO
SEOUL (Reuters) - South Korean train manufacturer Hyundai Rotem Co (064350.KS) surged on its share market debut on Wednesday, soaring 66 percent as investors flocked to the country's largest IPO in three years.
Hyundai Rotem hit a high of 38,200 won in active trade, valuing the firm at 3.25 trillion won ($3.1 billion), after it priced its $587 million IPO at 23,000 won, the top end of the range.
Hyundai is benefiting from a growing appetite for risk that has pushed South Korea's main index to 2013 highs this month. The index has been underpinned by strong interest from foreign investors, who were net buyers for a record 43rd consecutive session on Tuesday, purchasing a net 13.8 trillion won.
The benchmark Korea Composite Stock Price Index (KOSPI) .KS11, which hit its 2013 high last week, was trading down 0.4 percent on Wednesday.
South Korea has seen a standstill in offerings exceeding 300 billion won since 2011, as weak demand and difficult market conditions delayed listing plans from companies such as Hyundai Oilbank and POSCO Specialty Steel.
"It's a major heavy machinery issue with sizable business coming on to the market, and investors are adding it to their portfolio to better track the market," said Han Beom-ho, an analyst at Shinhan Investment & Securities.
Hyundai Rotem has more than a 90 percent market share in South Korean train orders, as well as a record of steady battle tank orders from South Korea's military. It also builds processing lines for factories owned by Hyundai Motor (005380.KS) and its affiliate Hyundai Steel Co (004020.KS).
The IPO was 55 times oversubscribed by retail investors, attracting 3.4 trillion won of demand.
Hyundai Motor is the firm's biggest shareholder with a 43.4 percent stake, and a Morgan Stanley (MS.N) fund owns 24.8 percent.
($1 = 1060.6500 Korean won)
(Reporting by Miyoung Kim; Editing by Richard Pullin)