Samsung SDS, an information technology services affiliate of Samsung Group, announced Thursday that it would push for an initial public offering this year in a bid to raise more capital to finance its global expansion.
The move is also likely to speed up the succession of power to Samsung heir apparent Lee Jay-yong, who holds a significant stake in the company, industry watchers said.
“In order for Samsung SDS to become a global ICT services firm, we decided to file for the IPO. We will make utmost efforts to expand businesses abroad including IT solutions and services in sectors ranging from telecommunications to health care to hospitality,” said Jun Dong-soo, CEO of Samsung SDS, in a statement.
The announcement came as a surprise, as the company had in the past persistently denied speculation that it would go public, with investors expecting the move to come at the end of this year at the earliest.
Business obstacles the company has recently faced in the domestic market are said to be the biggest reason for the firm to try to attract more investment, according to those close to the company.
Samsung SDS, along with a slew of other conglomerate-affiliated ICT firms, were recently forced to look for business outside the country after they were forbidden from participating in public projects, which the government said would be distributed among smaller players.
Also, the emergence of new business realms, such as cloud computing, big data and the Internet of Things, appeared to have pushed the firm to play catch-up with the rapid changes in the markets and look for new growth engines.
“Adhering to traditional businesses such as system integration could leave the company behind in the fast-changing ICT era,” the company said in a press release.
SDS said it would now put more focus on ICT solutions and services and less on SI equipment businesses.
The global IT solution and services market is evaluated to be worth around 1.9 trillion won ($1.9 billion), more than four times the market for IT components including semiconductors,
The company will beef up its workforce, establish research and development centers in the U.S. and India and further try to strike merge and acquisition deals at home and abroad.
It will select an investment firm to lead the IPO and decide on the schedule and IPO method this month.
Market analysts said the upcoming IPO indicates that Samsung Group is accelerating the inheritance process of the Samsung family.
Lee Jay-yong, the heir apparent of Samsung Group, holds 11.25 percent of the ICT firm’s shares ― the third largest stake after Samsung Electronics and Samsung C&T’s holdings ― while his sisters Boo-jin and Seo-hyun have 3.9 percent each.
With the IPO of the ICT firm on the horizon, many eyes are also on the value of the company’s stocks.
A share of the company in the over-the-counter market doubled to 151,500 won in late April since August 2013, and it stands at 149,500 won as of Wednesday.
When the firm goes public, its market capitalization will likely far surpass the current 11.6 trillion won, and the shares held by Lee Jay-yong are expected to be worth more than 1 trillion won.
By Kim Young-won (email@example.com)