Sale of South Korea's Mando Possible

The sale of Mando Corp is expected as major foreign shareholders of South Korea’s second largest auto parts maker sell their interest.

The speculation that Mando will be put up for sales was triggered by a report by The Financial times which said the company may fetch about $1.5 billion-$2 billion, generating a windfall for owners JP Morgan Partners and Affinity Capital.

The sale of Mando is drawing the attention by the Korean stock market for the second time in about six years. The company made headlines when it was sold in 1999 after the collapse of its parent company Halla Group two years earlier.

Mando is a main supplier to Hyundai Motor, South Korea’s largest carmaker, and its affiliate Kia Motors. Mando also operates a tier one plant in Alabama.

The Hyundai Motor Group, a potential bidder, already has Hyundai Mobis, the nation’s largest auto parts maker. But, I see the high asking price reducing Hyundai Motor’s appetite for Mando.

Foreign investors JPM Partners and Affinity control 72 percent of Mando, Chung Mong-won owns 9.3 percent, and Halla Engineering and Construction another 9.3 percent.

The Halla Group’s demise was heralded by the 1997 Korean fiscal crisis. Halla’s founder Chung In-Yung was the brother of Hyundai Group founder Chung Ju-Yung.