HYBE Corp.’s Chairman Bang Si-hyuk pocketed about 400 billion won ($300 million) through an undisclosed profit-sharing agreement with private equity investors during the company’s 2020 initial public offering.
The deal, signed with STIC Investments and other private equity firms before the IPO, entitled Bang to 30% of profits from share sales after the listing of the company behind K-pop sensation BTS. The arrangement wasn’t disclosed in IPO documents.
The private equity groups, which held a 23.6% stake, sold nearly 5% of their holdings in the first four days of trading, reaping 425.8 billion won as the stock soared 150% from its offer price of 135,000 won. STIC Investments later offloaded more shares through block trades in December 2020 and July 2021.
Investment bankers familiar with the deal defended the non-disclosure, saying legal reviews determined it was a private agreement between shareholders that didn’t require public revelation. They noted Bang accepted the profit-sharing clause in exchange for giving the funds an early exit option, as initial investments were made when BTS members’ military service timeline was uncertain.
The arrangement has raised questions about transparency in South Korean IPOs, though company representatives maintain it didn’t harm general shareholders’ interests.
