The South Korean bourse operator has failed to properly screen a special purpose acquisition company’s (SPAC) takeover of a firm, documents showed Sunday, raising concerns that retail investors could suffer unnecessary losses in the future.
In November, Korea Exchange (KRX) approved an acquisition by Kyobo-KTB SPAC of auto parts maker Korea Fueltech Corp. Kyobo-KTB SPAC is a jointly-built paper company between two brokerages, Kyobo Securities Co. and KTB Securities Co., that aims to raise proceeds through an initial public offering to acquire another firm.
The ownership structure of Korea Fueltech’s Chinese subsidiary, however, turned out to be different from what had been made public in a regulatory filing, according to a Chinese government document obtained exclusively by Yonhap News.
The Certificate of Approval for Establishment of Enterprises with Foreign Investment in China, issued in May by the Beijing municipal government, showed that a 45 percent stake in Beijing KFTC Co., the Chinese unit of Korea Fueltech, was owned by Chinese firm Cheerplan Investment Co. which had invested US$ 1.71 million.
Korea Fueltech had invested US$ 1.805 million in Beijing KFTC, which was capitalized at US$ 3.8 million, the certificate showed.
But a regulatory filing provided by KRX showed Korea Fueltech owning a 87.5 percent stake in its Chinese subsidiary.