Dual Listing Resolution or Sell-Off at Peak?... BGF Retail Owner Family Sells 1 Million Shares

Hong Seokjun and His Daughter Now Hold Zero Stake in BGF Retail
JoongAng Holdings Chairman Hong Seokhyun and Spouse Cash Out KRW 55.7 Billion
BGF Retail's Performance Improves... Majority Shareholder's Stake Drops from 51% to 45%

Specially related parties of BGF Retail's largest shareholder, the operator of convenience store chain CU, have begun to dispose of their holdings one after another. Since the start of this year, four specially related parties—including the siblings and niece of Hong Seokjo, Chairman of BGF Group—have collectively sold about 1 million shares of BGF Retail. Notably, some of these parties have fully disposed of their BGF Retail stakes, drawing attention to the underlying reasons.

According to the Financial Supervisory Service’s electronic disclosure system on September 18, Hong Seokjun, Chairman of Bokwang Venture Investment, his eldest daughter Hong Seungyeon, Hong Seokhyun, Chairman of JoongAng Holdings, and his spouse, Shin Yeongyun, CEO of Areumjigi, have collectively sold a total of 998,580 BGF Retail shares on the open market since the beginning of this year. This amounts to about 5.8% of BGF Retail’s total outstanding shares.

BGF Group spun off into the holding company BGF and the operating company BGF Retail in 2017, with both companies subsequently listed. The shares sold in concentrated amounts by Chairman Hong Seokjo’s relatives pertain to BGF Retail. As a result, the stake held by entities affiliated with BGF Retail’s largest shareholder fell to the 50% range in March, to the 49% range in May, and then to the 46% range in June. Most recently, Seungyeon further disposed of her remaining shares, and the stake has now dropped to the 45% range.

Among the specially related parties, the first to initiate large-scale share disposals was Chairman Hong Seokjo’s younger brother, Chairman Hong Seokjun. In February, he sold 150,000 shares on the open market, followed by the complete disposal of his remaining 141,521 shares in May. Including the 160,000 shares sold in September last year, he had completely exited his BGF Retail holdings within approximately nine months.

Chairman Hong Seokjun’s eldest daughter, Seungyeon, also disposed of her 251,893 BGF Retail shares in multiple transactions earlier this year. She sold 35,848 shares from February to March, 34,035 shares in May, and 35,965 shares in June. She then sold all remaining shares during August and September, reducing her holdings to zero. In total, the father and daughter together sold a combined 547,014 BGF Retail shares this year.

However, both individuals have maintained their holdings in the holding company, BGF. As of the end of June, Chairman Hong Seokjun held a 1.68% (1,604,693 shares) stake in BGF, and Seungyeon held 0.49% (470,206 shares). Considering that BGF is the largest shareholder of BGF Retail with a 30% stake, their disposals only involved direct stakes in the operating company.

In contrast, the share sales by Chairman Hong Seokjo’s older brother, Chairman Hong Seokhyun, and his spouse, Shin, were motivated by a separate issue: liquidity problems facing JoongAng Group. In June, Chairman Hong Seokhyun sold 370,878 BGF Retail shares through the open market, raising roughly 46.7 billion won in cash, while Shin sold 70,688 shares in the same month, securing about 9 billion won. Together, the couple disposed of a total of 441,566 shares—worth approximately 55.7 billion won—in just one month.

This coincided with a period when liquidity issues at core JoongAng Group subsidiaries surfaced, following JTBC’s default. The BGF Retail shares held by Chairman Hong Seokhyun and his spouse were also subject to collateral agreements for loans, and at roughly the same time, Chairman Hong Seokhyun sold shares of the holding company BGF as well. This is different from the pattern of Hong Seokjun and Seungyeon, who only disposed of their BGF Retail holdings and maintained their BGF shares.

The sale of BGF Retail shares by these specially related parties occurred as the convenience store's performance improved and its stock price rebounded. At the beginning of the year, BGF Retail's share price hovered around 100,000 won, but on the back of recovered sales at existing stores and improved profit margins, it rallied and touched an intraday high of 156,600 won on August 11. Seungyeon sold her remaining shares during this period.

BGF Retail reported consolidated sales of 2.4268 trillion won and operating profit of 84.9 billion won in the second quarter of this year. These figures represent increases of 6.0% and 22.3%, respectively, year-on-year. In particular, operating profit exceeded market expectations by over 10%. Its cumulative sales for the first half of the year reached 4.5472 trillion won, up 5.6% from the previous year, while operating profit rose 33.7% to 123 billion won. The outlook for the third quarter is also positive. According to financial information provider FnGuide, third-quarter sales and operating profit are projected at 2.5594 trillion won and 113.4 billion won, respectively, representing increases of 4% and 16% year-on-year.

Yoo Jeonghyun, an analyst at Daishin Securities, commented, "In addition to qualitative growth in convenience store outlets, quantitative improvement was achieved with increased foreign customer sales. The proportion of low-margin sales has declined while high-margin product sales have risen, creating a virtuous cycle of profit improvement that is expected to continue."

These relatives acquired BGF Retail shares as part of BGF Group’s spin-off process. Upon relisting after the corporate split, BGF Retail reached the upper price limit on strong performance expectations fueled by the convenience store boom, briefly exceeding 250,000 won. However, concerns over market saturation later sent the stock price downward until a rebound at the end of last year. This has given rise to the interpretation that the recent sales were a move to capitalize on the high stock price. Additionally, some analysts believe that expectations of resolving issues caused by the recently tightened multiple-listing regulations were also reflected.

A BGF Retail official stated, "This is unrelated to any restructuring of affiliates or governance structure at the corporate level. The company is also not aware of the individuals’ reasons for selling."

This content was produced with the assistance of AI translation services.