Boston Dynamics - Rights Offering of 1.2 Trillion Won Expected; Potential IPO in 2027/2028 in NASDAQ

• There has been an increasing probability that Boston Dynamics (BD) announces a fourth rights offering capital raise worth about 1.2 trillion won (US$870 million) in the next several weeks.

• All the Hyundai Motor Group related entities are expected to increase their ownership stakes in Boston Dynamics whereas it is expected to decline for Softbank post the capital raise.

• The current valuation estimates of Boston Dynamics (post capital raise) vary widely from about 4 trillion won to 10 trillion won.

Impact on Hyundai Motor Group Companies on This Rights Offering of Boston Dynamics

We believe that this rights offering capital raise is likely to have a positive impact on the Hyundai Motor Group companies. Despite continued operating losses since its acquisition four years ago, there is expected to be an enormous demand for industrial robots in the coming decades.

Boston Dynamics is one of the global market leaders for humanoid robots among Korean owned robotics companies. More investors would want the Hyundai Motor Group to continue to invest in Boston Dynamics despite continued losses.

Pick, Carry, Place, Repeat | Inside the Lab with Atlas (Source: Boston Dynamics)

Spot at POSCO; (Source: Boston Dynamics)

Stretch at Gap; (Source: Boston Dynamics)

Shareholding Structure of Boston Dynamics

The following are the major shareholders of Boston Dynamics:

• HMG Global - 54.7%

• Chairman Chung Eui-Sun - 21.9%

• Softbank - 12.4%

• Hyundai Glovis - 11%

Post rights offering capital raise, Boston Dynamics' shareholding structure could change as follows:

• HMG Global - 55.7%

• Chairman Chung Eui-Sun - 25%

• Softbank - 6.7%

• Hyundai Glovis - 12.6%

HMG Global is a joint venture with the major Hyundai Motor Group companies. HMG Global is a joint venture among Hyundai Motor Company (49.5% ownership), Kia Motors (30.5%), and Hyundai Mobis (20%). HMG Global's total investment in Boston Dynamics in this rights offering is expected to be 732 billion won. HMG Global currently owns a 54.7% stake in Boston Dynamics.

Notice that all the Hyundai Motor Group related entities are expected to increase their ownership stakes in Boston Dynamics whereas it is expected to decline for Softbank post the capital raise. Chairman Chung and the major Hyundai Motor Group companies are all likely to participate in this rights offering capital raise, similar to how they all participated in the three previous capital increases post the acquisition of Boston Dynamics in 2021.

In other words, Softbank is unlikely to inject further capital into Boston Dynamics in the next round of capital raise. For now, Softbank may decide to sell its remaining stake in Boston Dynamics (12.4%) all at once this time or retain a partial stake in BD post this capital raise.

During a conference call on 25 July, Hyundai Mobis announced its decision to invest $106 million (146.5 billion won) in Boston Dynamics in August as BD is reportedly planning a rights offering paid-in capital increase of $848.8 million (1.2 trillion won) in August. The amount of investment size will likely be in proportion to the stakes owned by each major shareholders (however, this is subject to change). This 1.2 trillion won capital raise is expected to be the fourth major paid-in capital raise for Boston Dynamics.

In addition to Hyundai Mobis, Hyundai Motor Company and Kia Motors are also expected to invest $262.4 million (362.6 billion won) and $161.7 million (223.4 billion won), respectively, in proportion to their respective stakes. Chairman Chung Eui-sun and Hyundai Glovis are also expected to invest $212.2 million (293.1 billion won) and $106.6 million (147.1 billion won), respectively.

Circular Ownership Structure of Hyundai Motor Group

Hyundai Motor Group is the only major Korean conglomerate still operating under a circular shareholding system.