South Korean massage chair maker Bodyfriend announced on April 26 that it has decided to officially drop its recent plans to go public.
The decision came after it failed to get preliminary screening approval by the Korea Exchange, which the massage chair maker filed for in November last year as part of its plan to get listed this year.
“We accept the results and consider it as advice given to us for our lack of preparation,” a Bodyfriend official said in a statement. “We will work on making the company’s management more transparent and improve our corporate governance.”
Although the Korean company declined to state the direct reasons for receiving disapproval from the KRX, industry watchers see that it could be because of its recent troubles.
According to the Ministry of Employment and Labor’s inspection in January, Bodyfriend violated around 20 labor laws, which include not paying employees for their overtime, paid leave and bonuses properly and mandating them to purchase the company’s products. After the ministry’s announcement, Bodyfriend CEO Park Sang-hyun also faced criminal charges for labor law violation.
Moreover, even before filing for a preliminary screening, Bodyfriend also had to pause its listing process for a while in August last year as Financial Services Commission decided to inspect its books as it spotted some problems. As per laws, the government can conduct an audit of an unlisted company for a maximum of 80 days. During this period, they often withhold their IPO process.
The massage chair maker first attempted to go public back in 2014 but the plans were put off after its ownership change. Bodyfriend’s largest shareholder VIG, in a consortium with Doosan’s venture capital unit Neoplux, acquired a 91 percent stake for 400 billion won ($345.39 million) in 2015. The consortium currently owns 65.84 percent stake.
The firm, which was established in 2007, is the nation’s No. 1 massage chair brand with more than 70 percent market share. Its sales last year increased by 9.1 percent to 450.5 billion won, while its operating profit dropped by 39 percent to 50.9 billion won.
By Song Seung-hyun (firstname.lastname@example.org)