SEOUL Samsung SDS Co Ltd, the IT solutions affiliate of South Korea's Samsung Group SAGR.UL, on Thursday said it is planning an initial public offering this year, joining other global technology firms seeking to tap strong investor demand.
Samsung SDS said it would select IPO lead managers this month and decide the size of the share offering, in a deal that may benefit top shareholders such as Samsung Electronics Co Ltd (005930.KS) and Samsung Electronics Vice Chairman Jay Y. Lee.
The plan signals an accelerating restructuring in Samsung Group as its founder and owner family prepares to hand over control of South Korea's biggest conglomerate to the third generation.
"With growth potential in the local market constrained by regulations, we've concluded we need to seek M&A and partnership to secure future growth and accelerate the change through public listing," SDS said in a statement.
The offering also could be the biggest IPO in South Korea this year as many firms have withdrawn their listing plans amid weak stock market performance.
Samsung SDS shares trade at 147,500 won in the over-the-counter market, valuing the company at around 11 trillion won ($10.8 billion).
Samsung Electronics, the world's largest smartphone maker, is the biggest shareholder of SDS with a 22.58 percent stake, followed by building and trading unit Samsung C&T Corp (000830.KS) with 17.08 percent and Lee, who has 11.25 percent.
Shares in Samsung C&T were up as much as 8.3 percent after the listing plan was announced.
Samsung Electro-Mechanics, which owns 7.88 percent, also rose as much as 3.8 percent. SDS saw its operating profit fall 9 percent to 506 billion won last year, while its revenue grew 15 percent to 7 trillion won.
Samsung SDS provides all the main IT services for Samsung Electronics, such as computing and data centers, as well as tech services for other Samsung affiliates.
It plans to pursue M&A and partnerships locally and abroad to buy new technology and solutions in fields such as mobile, cloud, big data and cybersecurity.
It also plans to open research centers in the United States and India. ($1 = 1022.5500 Korean Won)
(Reporting by Joyce Lee; Additional reporting by Hyunjoo Jin; Editing by Stephen Coates)