Hyundai Heavy Industries to go public later this year

Hyundai Heavy Industries plans to go public this year, hoping to raise 1 trillion won ($904 million) to invest in eco-friendly businesses, the company announced Tuesday.

The shipbuilder is currently a wholly-owned subsidiary under Korea Shipbuilding & Offshore Engineering (KSOE) — an intermediate holding company of Hyundai Heavy Industries Group.

As approved in a board of directors meeting Tuesday, Hyundai Heavy Industries will issue shares equivalent to a 20-percent stake in the company within this year.

“For the next five years, HHI will invest up to 1 trillion won in technologies to build ships, shipbuilding methods and production equipment that meet higher environmental standards,” the company said in a statement.

Ships that run on eco-friendly fuel like ammonia and hydrogen, self-sailing technology and duel fuel engines that enable use of both combustible and liquefied natural gas (LNG) were mentioned as areas where the company is planning immediate investment. HHI also said it will be on the search for mergers or acquisitions of companies with fuel-cell technology.

This won't be the first time HHI has been listed on the local stock market. Until 2019, HHI was traded on the Kospi. In 2019, the company changed its name to KSOE and split into an operating company, which took the HHI name, and an intermediate holding company, KSOE.

The decision was part of a move to acquire the cash-ridden Daewoo Shipbuilding & Marine Engineering (DSME). Since then, KSOE has been traded on the stock market, while the HHI became a wholly-owned subsidiary under KSOE.

Underlying HHI’s IPO and massive investment plans is the company’s opinion that Korea’s shipbuilding industry is clearly recovering from its darkest days.

According to Clarksons Research, which focuses on shipping, Korean shipbuilders took 43 percent of ship orders placed last year by tonnage. In January alone, HHI Group closed deals worth 1.3 trillion won.

The increase in demand comes from strengthened environmental regulations in the shipping industry, which from last year obligated use of marine fuel with a sulfur content of less than 0.5 percent. In other words, newly built ships should use eco-friendly fuel or come with hardware that reduces sulfur emissions.

Korean shipbuilders were able to benefit from this trend as eco-friendly ships require advanced production technology. Clarksons Research has forecast ship orders to increase 21 percent on year in 2021.

“The industry paradigm in global shipbuilding is shifting toward advanced technology,” HHI Group said in a statement. “Our aim is to become a market leader that sails at the forefront of change.”

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]