Morgan Stanley buys a stake in Hyundai Motor affiliate

Morgan Stanley Private Equity Asia is acquiring over 10 million shares in an affiliate of Korea’s Hyundai Motor Group in a transaction worth $89 million.

Morgan Stanley’s Asia Pacific private equity group is acquiring 10.7 million shares in unlisted Rotem Company, an affiliate of Korea’s Hyundai Motor Group, for KRW 85 billion ($89m; €69m). The shares are a 20.7 percent stake in Rotem.

Hyundai Motor is disposing 10,658,357 of its shares in Rotem at KRW 8,000 a share in a “strategic capital alliance with Morgan Stanley,” the company said in a regulatory filing. The share disposal is expected at the end of August.

Rotem aims to slash its debt-to-equity ratio to around 200 percent from 350 percent, and plans to offer new shares in September, according to a Dow Jones Newswires report citing a Hyundai Motor spokesman.  Morgan Stanley and Hyundai Motor are planning to participate in the rights offering, the spokesman said.

In a separate filing, Hyundai Motor said it will acquire 7.2 million shares via a rights offering for KRW 58 billion.

Rotem designs, manufactures and sells railway vehicles from two plants and research & development centres in Korea.