Hyundai motor sale

Hyundai's car division is one of the most profitable parts of the business

South Korean conglomerate Hyundai has sold a stake in its motor subsidiary, in a move which paves the way for the spin off of one of the world's biggest car companies.

The conglomerate's founder sold a 6.1% stake in the company to investors.

The move is seen as a positive one for the car company, whose profits have been used to support some of its struggling affiliates.

Hyundai is now to submit its plan to make the motor company an independent entity to the Fair Trade Commission this week.

For the sale to go ahead, Chung Ju Yung had to reduce his 9.1% to 3% or less.

"The separation of Hyundai Motor now looks like a reality and that will block risks coming from the group," said Joe Lee, an analyst at Daiwa Securities.

It made a record $277m profit in the first half of the year, nearly three times the amount made in the same period last year.

The strong sales were boosted by exports as well as domestic demand for luxury sedans.

Pressure on chaebol

The group has come under pressure from creditors and the South Korean government to streamline its sprawling structure and to unwind the Chung family's control of the business.

Investors were particulary concerned at the situation at Hyundai Engineering, the parent company of the group, which had borrowed heavily from its subsidiaries.

The difficulities in finding out the true debt position of the company, and the fear that the family was still remaining in effective control, further unnerved investors.

The problems Hyundai faces are typical of those faced by many Korean businesses.

Known as chaebol, they are often family run and have become renowned in recent years for their inefficiency and nepotism.

Korean banks have lent heavily to the handful of conglomerates that dominate the country's economy.

Their interests span everything from shipyards to electronics.