The National Pension Service is taking seemingly contradictory positions on Hanssem. As an investor in private equity funds, it continues to hold more than 220 billion won in investment exposure to the fund managed by IMM Private Equity (PE), which acquired Hanssem.
But as a shareholder in the listed company, it has sold its Hanssem shares and opposed the reappointment of an IMM PE-affiliated director.
With Hanssem's share price having fallen to one-fifth of its acquisition price, the National Pension Service is likely to incur investment losses unless the stock stages a dramatic rebound.
According to the NPS and investment banking (IB) industry sources on the 30th, the NPS held an investment balance of 228.861 billion won in IMM PE's Rose Gold No. 4 fund as of the end of last year. The investment balance represents the amount of capital contributed that has not yet been recovered and can be viewed as the NPS's market exposure (risk exposure).
Rose Gold No. 4 is a blind pool fund with a size of approximately 2 trillion won, in which the NPS committed to invest in the range of 400 billion won. Since IMM PE invested 17% of its total commitment into the acquisition of Hansem, applying the same ratio suggests that the NPS funds used for the Hansem acquisition are estimated to be over 68 billion won.
The NPS's position regarding the same company is diametrically opposed. The NPS was a shareholder holding more than 5% of Hansem until the end of last year, but it sold its shares in the first quarter of this year and dropped off the list.
This occurred during a period when the NPS had temporarily suspended rebalancing (asset weight readjustment) to maintain its domestic equity ratio while raising its target allocation for domestic stocks; yet it actually reduced its Hansem holdings.
At the regular shareholders' meeting in March, it voted against the re-election of Song In-jun, an alternate non-executive director nominated by IMM PE. This was based on the NPS's criterion of opposing appointments if a director's attendance rate at board meetings during the previous term is below 75%.
In one capacity, it is funding IMM PE's management of Hansem, while in another, it is casting a negative vote against that management team. The NPS has different organizations responsible for private equity fund investments and exercising voting rights on listed stocks, which can lead to such conflicting positions even for the same stock.
IMM PE signed an acquisition contract for Hansem on October 25, 2021, when demand for furniture replacement and remodeling was growing as time spent at home increased due to the COVID-19 pandemic, and became the largest shareholder on January 4 of the following year. The final acquisition price was 1.4413 trillion won for a 27.71% stake, equivalent to 221,000 won per share.
This price included a control premium of approximately 90% over the closing price of 116,500 won on the contract signing date. Of the acquisition price, 855 billion won was financed through acquisition financing, and the loan maturity was recently extended to March 2028. The cash interest rate has been lowered to 0.5% per annum, while the remaining interest is added to the principal and repaid in a lump sum at maturity.
However, following the acquisition, rising interest rates led to sluggish housing transactions, causing Hansem to post its first annual operating loss (21.7 billion won) since its listing in 2022. Hansem's stock price was 38,800 won based on the previous day's closing price, down 15.9% year-to-date and 82.4% lower than the acquisition price.
The securities industry cites the decline in B2B (business-to-business) revenue from supplying built-in furniture to new apartments for construction companies due to the sluggish construction market as a cause of the stock price drop.
Costs incurred when Hansem absorbed its subsidiary, Hansem Nexus, which had been responsible for supplying furniture to high-end redevelopment apartments, last July are also mentioned as a factor delaying earnings recovery.
The decline in the stock price has also lowered the collateral value of the acquisition financing. The Hansem shares held by IMM PE as collateral amount to 8,339,691 shares, valued at approximately 323.6 billion won based on the previous day's closing price.
Even to repay just the principal, Hansem's stock price would need to rise to 2.6 times its current level. Adding the interest that accumulates until maturity, the required stock price becomes even higher. The NPS's contribution to the Hansem acquisition is expected to be recovered in earnest only if the sale of Hansem is successfully completed.
In response to inquiries about plans related to Hansem, the NPS replied, "It is not possible to confirm individual investment cases." IMM PE did not respond to the inquiries.
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