BTS creator faces probe for allegedly misleading investors over K-pop agency Hybe's IPO
Mr Bang, also known as 'Hitman' Bang, is widely recognized as the creator of the globally successful K-pop group, BTS. He established Big Hit Entertainment in 2005, whose name was later changed to Hybe. BTS earlier in July announced a new album and a world tour after recently completing military service.
The Financial Services Commission (FSC) referred the largest shareholder of an unidentified company and its former executives on allegations of deceiving investors and violating trading practices. While the FSC did not name the probe's targets in its statement, a person familiar with the investigation told Bloomberg News the company in question was Hybe.
The parties 'deceived existing shareholders by making it seem as if the listing would be delayed' even though the company was preparing for the IPO, the FSC said in the statement. That prompted the existing investors to sell their holdings to a special purpose vehicle that was established by a private equity fund in which the company executives were involved, the statement added.
Hybe shares fell as much as 1.3 per cent on July 17, before recovering to trade up 0.8 per cent by 10.50am Seoul time. The stock is up about 39 per cent so far this year.
'The recent movement in Hybe's stock price is driven more by expectations for next year's earnings than by external factors related to chairman Bang,' said Kim Jihyun, analyst at Heungkuk Securities. 'Under Hybe's current multi-label structure, Bang's legal risks are not directly affecting the share price yet.'
Hybe said it respects the FSC's decision and will do its best to proactively take efforts to restore the trust of the market as well as stakeholders. It also expressed regret that the FSC rejected Mr Bang's explanation that he did not pursue the IPO for personal gain.
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The Hybe IPO raised about US$820 million (S$1.05 billion), pricing shares at the top of the marketed range.
The FSC allege that Mr Bang, whose net worth is estimated at US$2.3 billion, according to the Bloomberg Billionaires Index, had signed a profit-sharing agreement with the private equity fund, but concealed that information during the IPO process.
That agreement allowed Mr Bang to collect about 30 per cent of the profits from the share sales after the IPO, the statement added. Mr Bang, 52, is said to have made approximately 190 billion won (S$176 million) through the side transaction, according to Yonhap News. FSC did not reveal the amount Mr Bang made from the side deal.
The investigation is the latest controversy to hit Hybe. In 2024, the firm was shaken by a rare public feud involving chart-topping girl group NewJeans, which sought to unilaterally terminate a lucrative exclusive contract with Hybe affiliate Ador. BLOOMBERG
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