this is a faulty framing of the situation. He didn't say it is BTS's fault.
I believe that this was illegal, but Bang's framing is also somehow believable. It actually quotes what I said when they announced the IPO - they go public, and ask people to take huge risks, based on one stupid boyband. Who is also on the verge of going to the military. With new elections standing at the door and so much more to consider. I said it from the beginning, that I am surprised over the very own existence allowed by the trading commission because there are several aspects to consider and one of the things they are responsible for, is to ensure that the company going public has enough potential and "goods" to stand on their feet. A kpop company, whose only revenue, or making almost 90% of the revenue, isn't a trustworthy financial investment.
It looks like he was looking for investors, some of them backed out, because the whole BTS situation was too insecure, he offered them a more than good deal, for them to resell their stock, which looks like a insider trading fraud, but also those investors asking questions based on the same presumption, could be equally seen as a insider trading.
They were not sure about BTS and he was still planning the evolution of the company at that time.
"Is it unfair to deceive investors?" What is the truth... Reconstruction of the 'Bang Si-hyuk case'
Original article
Reporter Shin Gun-woong
"Early investors, risk management before joining the BTS army... I ask you to buy shares first"
Chairman Bang takes risks by connecting new investors... Instead, he is promised to make a profit from the listing.
Hive Chairman Bang Si-hyuk / News1 c News1 Reporter Song Won-young
(Seoul=News1) Reporter Shin Gun-woong = The police summons investigation of Bang Si-hyuk, chairman of the board of Hive (352820), who is under suspicion of 'fraudulent illegal trading', is imminent.
According to the industry on the 21st, the police will summon Chairman Bang this month to investigate the allegations of unfair business (IPO).
Chairman Bang is accused of selling Hive shares to a private equity fund (PEF) established by his acquaintance after infying that existing investors such as investors and Venture Capital (VC) have no plans to go public before Hive was listed in 2019. After the listing of Hive, the private equity fund sold its holdings, and Chairman Bang received 30% of the sale profit under the pre-signed shareholder contract.
Chairman Bang is in a position to be unfair. He protests that it was not a deceiving the initial investors, but because the investors requested it. Regarding the profit distribution, it is explained that the condition was first proposed by the investor.
With different claims, we reconstructed the case of what happened from before the sale of Hive's initial investor stake to the listing.
"How long will BTS be? We should go to the army"... The anxiety of early investors
In 2017, Hive (Big Hit at that time)'s main singer was BTS. After his debut in 2013, he was a star who ranked first on the music chart with 'I NEED U', 'Sweat Tears', 'Spring Day', 'Burning', and 'DNA'. He was on the album chart on the American Billboard and the British Official Chart and rose to the ranks as a world star.
The ransom of Hive has also increased due to the success of BTS. In the meantime, the worries from the point of view of early investors have deepened. It's not that Korean idols have hit overseas, but they knew it wasn't easy. There was also a fear that it might end with a 'shinging'. I had doubts about whether this was the peak.
Decisively, the time for military enlistment was approaching. It wasn't a problem if there was another singer to replace BTS, but I didn't see any other alternative in Hive.
Early investors were reluctant to continue to take on the uncertainty in a situation where the value of the hive was high. The listing was also uncertain. At that time, even within Hive, he risked his life and death to attract global investment rather than listing. It was a judgment that if you receive a big foreign investment like Coupang, which received funding from SoftBank, you can focus more on management.
In the end, institutional investors who invested in the early stage decide to sell their shares for risk management. It was an atmosphere that I earned enough money in a situation where I didn't know the future.
c News1 Designer Yoon Joo-hee
Early investors who went out for 'risk management'... Selling their shares through Bang Si-hyuk
It is said that investors asked Chairman Bang to buy shares.
Hive also asked American and Japanese investment companies about their intention to buy shares in response to the request to sell shares of the old shareholder in 2018. However, investors did not accept the structural problem of relying on a single IP called BTS and the gap problem due to military service.
In the end, Chairman Bang helped the saver's funds by connecting Stick Investment and Easton Equity Partners (Easton PE). In October 2018, Stick spent 103.9 billion won to buy Hive's old shareholder (12.4% of the stock) owned by LB Investment and institutional investors.
In June of the following year, Eston PE spent 25 billion won to buy a part of the shares of Vice President Choi Yoo-jung (2.7%). In November of the same year, through joint investment with New Main Equity, he bought an additional 8.7% of the shares in Alpenroot Asset Management, the remaining shares of Vice President Choi, and LB Investment Preferred Shares.
Chairman Bang promised investor protection clauses (downside protection) for Stick and Easton PE while helping early investors recover funds. If it was not listed by the specified time, Chairman Bang would buy the shares at a higher price. Instead, he promised to receive 30% of the profit if he went public.
In this process, the initial investors got a lot of profit. LB Investment is said to have earned nearly 20 times the principal. Legend Capital, who was another shareholder, also took over part of the stake (3.88%) and made a profit. The remaining 6.2% of the shares were sold after the IPO. Alpenrut, which has the lowest yield, also made a profit of more than 50% of the principal by selling its holdings. At that time, it was a deal that was 'win-win' with each other according to their needs.
Bang Si-hyuk, chairman of Big Hit Entertainment, is giving a commemorative speech at the Big Hit Entertainment listing ceremony held at the Korea Exchange in Yeouido, Seoul. 2020.10.15/News1 c News1 Photo Co-Duck Foundation
BTS's hit... Failed to attract global investment and suddenly turned to IPO
Contrary to the doubts of early investors, BTS won as a world star. 'Poem for Small Things' released in 2019 and 'Dynamite' released in 2020 were really great. Not only did he occupy the Billboard chart, but he was the first Korean singer to hold a solo concert at Wembley Stadium in the UK.
Meanwhile, Hive's global investment attraction was stranded. It attracted a total of 2014 billion won in equity investment from Netmarble (251270), but failed to catch the overseas big hand that was originally considered. I was concerned about the uncertainty about the genre of entertainment.
In the end, Hive is listed. We will send a bid request (RFP) for the selection of the public offering (IPO) organizer in January 2020, and enter the stock market in October of the same year.
The public offering price is 135,000 won per share, but on the first day of listing, it was successful at the box office with a 'Tasang' (2 times the public offering price). In November 2021, it went up to 421,500 won. In March 2021, Big Hit Entertainment also changed its name to Hibro.
It was a pity from the point of view of an early investor who sold his shares before listing. The timing of the selection of the organizer two months after the last sale of the old shareholder became a controversial issue.
However, an official said, "No one knew that BTS would be this good," and "early investors handed over their shares in preparation for the failure of the listing."
Reporter Shin Gun-woong (
keon@news1.kr)
www.koreaboo.com
