GL Entech, Part 2
GL Entech's listing was such a runaway success that "huge" barely did it justice.
People were desperate to know how high GL Entech's stock price could climb.
Securities firms rushed to issue buy recommendation reports on GL Entech. The only ones that didn't were Yuseong Securities, Hwan Securities, and DA Securities.
With GL Entech's successful listing, the political voices calling for tighter regulation of physical spin-offs and subsidiary listings gradually quieted down as well.
Not missing the chance, the Federation of Korean Industries pressed the political world hard.
"GL Chemical's market cap was originally 70 trillion won. But after spinning off its battery division and listing it, the company is being valued at more than double that, at 160 trillion won. This proves that physical spin-offs and subsidiary listings can boost corporate investment and energize the stock market. If we regulate them, it won't just hurt companies; it could also inflict serious damage on individual investors."
He didn't say it outright, but it sounded as if the remark was aimed squarely at Namgoong Seok.
Namgoong Seok still refused to back down from his plan to force legal regulation. But compared to before, the momentum behind the legislation had clearly weakened.
The conglomerates led by the Federation of Korean Industries offered up a so-called self-regulatory package that looked respectable enough on the surface.
It was full of this and that, but when it came to protecting shareholders, the whole plan amounted to one thing: taking a portion of the allotment and giving parent-company shareholders "new share subscription rights" in the subsidiary.
Everything Namgoong Seok had pushed for — granting dissenting shareholders appraisal rights in a physical spin-off, banning listings after a physical spin-off, and giving parent-company shareholders in-kind dividends when affiliates listed — had been left out entirely.
Still, with public opinion already cooling, Representative Im Changsik accepted the self-regulatory proposal.
"We will continue monitoring companies to ensure they comply with self-regulation, and impose penalties if they fail to do so."
And just like that, the biggest issue in politics seemed to be slipping quietly out of sight. Im Changsik let out a private sigh of relief.
Good. This is wrapped up cleanly enough.
The self-regulation card, rather than legal regulation, was practically a masterstroke.
Anyone who became the next presidential candidate would be attacked no matter what they did.
If he had chosen one side or the other — regulation or no regulation — the attacks would have come in a flood. But by choosing the triangle in a game of O or X, he had navigated the obstacle with real savvy.
Besides, he had succeeded in planting the image that he valued corporate freedom, which would be a major asset on the road to the next presidential election.
The problem is Namgoong Seok, isn't it?
After making self-regulation the party line, he ordered the Woori Kookmin Party lawmakers to follow it. Every one of them obeyed — all except Namgoong Seok.
Not only did Namgoong Seok bring up the LD Studio probability-manipulation scandal, he argued that self-regulation was meaningless.
He had gone beyond refusing to follow the party line; he had openly challenged the party leader himself.
Thanks to that, even lawmakers from the New Korea Party were sneering at them, asking how they could fail to keep one of their own in line. From Im Changsik's point of view, it was a humiliating blow.
Come to think of it, this whole mess had started because of Namgoong Seok in the first place.
I'd better put him back in his place now, before he causes any more trouble.
The Woori Kookmin Party convened its disciplinary committee for Namgoong Seok.
[GL Entech, 15 straight trading days of gains. Stock price just shy of 250,000 won]
[IPO windfall! How high will it go?]
[GL Entech rally gives the KOSPI a tailwind]
There were also warnings that the stock was overheating, but some analysts predicted GL Entech would surpass DATL's market capitalization.
Famous analysts and investment experts appeared on economic broadcasts and talked their heads off.
"Right now, the world's largest battery company is China's DATL, with a market cap of 1.3 trillion yuan, or roughly 250 trillion won. DATL's mainstay is LFP, but GL Entech's core technology is NCM batteries, which are more advanced. Even now, if you exclude the Chinese market, GL Entech already has a higher share. As the market trend keeps shifting toward NCM batteries, GL Entech will overtake DATL and become number one in the world within a few years."
Even though people criticized it as a backdoor deal that let Continue Capital walk away with the cash, GL Entech's listing was a success.
Thanks to that, Go Jaeik, the CEO of GL Chemical, could finally breathe again.
This is over safely.
It felt as if he were being rewarded for all the hardship he had endured.
GL Group had never really had a proper flagship business. As befitted a chaebol, it had spread into a wide range of fields, but in home appliances and smartphones it was beaten by Yuseong Electronics, and in telecommunications it was beaten by LK Telecom.
But now it had a clear flagship business and a cash cow: batteries.
Thanks to GL Entech, the market capitalization of GL Group companies had increased by more than 100 trillion won, and in the conglomerate rankings it had jumped past LK Group into third place.
When you considered that the top-tier groups had barely changed positions for years, it was an enormous development.
Congratulations poured in from everywhere.
Go Jaeik couldn't hide his delighted expression.
But that lasted only a moment.
Once the stock broke above 200,000 won, he started to sense that something was wrong.
Even with the good news, this is climbing too fast.
And then, in just a few more days, it rose to 250,000 won, pushing the market cap past 200 trillion won.
The stock had already blown past the securities firms' target prices.
Even the firms that had been racing one another to raise their targets no longer dared push them any higher.
Anyone could see the stock had already strayed far beyond a fair valuation.
Worries about overvaluation triggered a flood of short selling. Under normal conditions, that should have pushed the price down or at least reduced trading volume.
But instead, the stock kept rising and the volume kept growing.
Which meant someone was buying it without caring about the price. It was almost as if they were methodically accumulating shares.
Go Jaeik frowned in confusion.
Who on earth is buying like that?
He decided he needed to look into it, but just then his secretary came in and said, "We have a call from Continue Capital."
He jumped at that.
"What? Who did you say it was?"
"Continue Capital, sir. They say they have something they want to tell you. Should I put them through?"
What in the world is going on?
Go Jaeik nodded.
"Put them through."
"Yes, sir."
After the secretary went back out, he picked up the receiver.
Then a man's voice came on the line.
"Hello, President Go Jaeik. My name is Han Miru."
"...Han Miru?"
He had never met the man in person, but he'd heard the name so many times he was sick of it.
"Yes. I work at Continue Capital."
"I know that much. What are you calling about?"
"First, let me congratulate you on the successful listing of GL Entech."
Coming from the same man who had been attacking GL Chemical right up until that moment, it didn't sound sincere at all.
"Thank you."
But the words that followed were unexpected.
"Why did you do it?"
"What do you mean?"
"Why did you list GL Entech? It harmed your shareholders. You can't possibly have been unaware of that, can you, sir?"
Go Jaeik was dumbfounded.
Is that something a man who just made 10 trillion won should be saying?
Suppressing the urge to snap back at him, Go Jaeik kept his voice calm.
"Thanks to it, didn't Continue Capital make a huge profit?"
"I do appreciate that. But listing GL Entech was something no executive should ever have done. I warned you twice about it."
"Warned me?"
"Yes. Once at your daughter's birthday party, and once more through Namgoong Seok."
How dare he talk about warnings in front of me?
Go Jaeik grew more and more irritated.
He wanted to swear and hang up on the spot, but he forced himself to remain polite.
"So what exactly are you trying to say?"
"GL Group is going to pay the price."
"...What?"
By then, he was past anger and into sheer bewilderment.
He was the CEO of GL Chemical and the heir to GL Group. Who on earth could say something like that to him?
"Are you threatening me?"
Han Miru answered calmly.
"No. I'm not threatening you. I'm telling you the truth. You had plenty of chances not to make that mistake. If you were determined to list it anyway, at the very least you should have given GL Chemical shareholders in-kind stock dividends. Then you could have prevented what was coming."
Go Jaeik asked in a cold voice, "What are you playing at? You're not joking, are you?"
"You'll understand soon enough. That's all I have to say."
The call ended.
Go Jaeik was left utterly stunned.
What the hell was that guy?
It was so absurd he almost wondered whether it had been a prank call.
At that moment, his secretary rushed back into the room in a panic.
"S-sir, we have a big problem."
"What is it?"
"Continue Capital has just filed a disclosure saying it bought 5 percent of GL Entech."
Go Jaeik nearly jumped out of his skin.
"What did you say?"
Then all those shares being bought all this time were Continue Capital's?
They couldn't be aiming for control.
GL Chemical held 80 percent of GL Entech, so the majority stake was already locked up. No matter what they did, they couldn't lay even the slightest hand on management control.
Then why the hell did they buy GL Entech shares?
In that instant, it felt as though lightning had struck Go Jaeik's head.
"N-no way..."
He had thought everything was over once GL Entech went public.
But that wasn't it.
The short attack on GL Chemical had only been the beginning.
The real target was...
"Th-this is insane!"
Continue Capital discloses acquisition of a 5 percent stake in GL Entech!
An IPO is the sale of shares to the public.
At that point, the company goes through an offering process and sells shares to institutions and individual investors. But individuals are slower to get information, and compared to major shareholders, they know very little about a company's internal affairs.
If a company inflated its revenue and earnings, went public, and then let its major shareholders dump a huge number of shares, investors who took part in the offering could be hurt when the stock price fell.
For that reason, to protect investors, the law imposes a six-month lockup that forbids major shareholders from selling their shares.
GL Entech, however, had extended that period to three years in order to avoid future stock dividends.
On top of that, it effectively forced the lockup by allotting subscription shares only to institutions that agreed to a lockup of at least one year.
There was a reason for all of this.
The first was to avoid the overhang issue.
Right before the listing, Continue Capital's attack had dragged GL Group's image into the dirt, and GL Entech's IPO success was suddenly in doubt.
In a situation like that, if the stock fell below the offering price right after listing, the company would face even harsher criticism.
So by preventing institutions from selling for a year, they removed fears of an excess supply of shares.
The second reason was that liquidity wouldn't be a real problem even if they did this.
The total shares released into the market were worth 8 trillion won at the offering price alone, which was more than the market cap of most major conglomerates.
And even if someone tried to accumulate shares, the more they bought, the higher the stock would climb, making it impossible to buy the whole lot.
Even if you poured in 10 trillion won, you'd be lucky to buy about half of it.
Who in the world would do something that insane?
And yet...
There was, in fact, such a crazy bastard in this world.