It was confirmed that DS Networks, a real estate developer proceeds a spin-off that separates the financial investment sector. DS Networks is one of the largest developers in Korea and was established in 1981. Chairman Chung Jae-hwan and his two children own 100% of shares.
As of the end of last year, the sales exceeded KRW 1.3 trillion and it has affiliates such as DS Construction & Engineering, DS Networks Asset Management, DS D&C, DS D&D and DSN Investment for financial investment business and subsidiaries for real estate development. Spin-off refers to divide the share of newly established companies in proportion to the ratio of current shares among existing shareholders.
On November 17, the investment banking (IB) industry said that DS Networks recently announced a spin-off plan and is promoting the establishment of a financial investment division. An official explained, “The spin-off is being pursued for the purpose of creating a company specializing only in financial investment by separating the financial investment business and the process is in the final stage.”
After the spin-off, DS Networks will act as a holding company in the real estate development business. DS Networks plans to go public. Under DS Networks, there are ▲DS D&C ▲DS D&D ▲DS Construction & Engineering as affiliates.
The newly established financial investment business will become a holding company of ▲DSN Investment, ▲DS & Partner, and ▲DS Networks Asset Management. The corporate name of the newly established financial investment business has not been decided yet. DS is considering DSN Holdings for a new corporation. The new corporation will be headed by Kim Young-cheol, former CEO of DS Networks, who has financial investment background.
Former CEO Kim is known to have played a major role in establishing DS Networks as the largest developer in terms of sales. In particular, the investment industry evaluates that he is demonstrating his expertise in the process of securing fund for land purchase and negotiation with the financial industry.
DS Networks’ spin-off of the financial investment business is closely related to the IPO of DS Network planned. DS Networks is pursuing IPO on the stock market at the end of 2022. The listing arrangement will be done by Samsung Securities and Shinhan Financial Investment. The company expects an corporate value (market cap) of more than KRW 1 trillion.
If the IPO of DS Networks goes as planned, it will become the second listed company as a developer in Korea. SK D&D(210980), the fourth largest developer in terms of sales (sales of KRW 699.7 billion in 2020) went public in 2015. If the corporate value of KRW 1 trillion is recognized as DS Network wishes, it will become the largest publicly traded developer in Korea.
The financial investment business will remain unlisted and lead the financial investment business. Recently, DSN Investment, a financial affiliate established by DS Networks with an investment of KRW 13 billion, applied for registration as a new technology business finance company with the financial authorities to act as a venture capital (VC). This is also part of strengthening the financial investment business. In addition, the proceeds from the sale of DS Investment Securities worth about KRW 120 billion will be invested in startups or new businesses.
DS Networks is originated from Daeseung Industries, which was founded in 1981 by the father of Chairman Chung Jae-hwan. Daeseung Industries was originally the maker of high-end watch, but it became the real estate developer by changing business type with the development of gas station development in Yeoksamdong, Gangnam, Seoul in 1991. The total sales of DS Networks are KRW 1.3375 trillion (as of the end of 2020, consolidated) and cash and cash equivalents are KRW 270.3 billion.