HD Hyundai Marine to launch Korea's largest IPO in first half of year

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HD Hyundai Marine to launch Korea's largest IPO in first half of year

President and CEO of HD Hyundai Marine Solution Lee Ki-dong, center, speaks during a press conference on the company's upcoming IPO at the Conrad Hotel in Yeouido, western Seoul, on Monday. [YONHAP]

President and CEO of HD Hyundai Marine Solution Lee Ki-dong, center, speaks during a press conference on the company's upcoming IPO at the Conrad Hotel in Yeouido, western Seoul, on Monday. [YONHAP]

 
SEONGNAM, Gyeonggi  HD Hyundai Marine Solution, a ship aftermarket subsidiary of HD Hyundai, is set to go public in an initial public offering (IPO) in early May with a target of raising up to 742.3 billion won ($536.2 million).
 
The planned IPO could be the largest in Korea since LG Energy Solutions in 2022 and the biggest listing in the first half of this year.
 
HD Hyundai Marine Solution's estimated corporate valuation of around 3 trillion won has stirred controversy, with some market insiders questioning whether its assessment is based on overly optimistic views.
 
"We have had meetings with overseas investors in Hong Kong, Singapore and the United States since last week," Kim Jeong-hyeok, the firm's CFO, told reporters during a press conference Monday. "They did not raise significant concerns about the company's valuation."
 
The company aims to offer 8.9 million shares priced between 73,300 won and 83,400 won per share. At the upper end of the range, HD Hyundai Marine could raise 742.3 billion won with a projected market capitalization ranging from 3.3 trillion won to 3.7 trillion won.
 
"HD Hyundai Marine Solution's offering [as the sole provider of ship repair and modification services] is unique globally, with no competing players," added Sung Ki-jong, vice president of HD Korea Shipbuilding & Offshore. "There have been aircraft maintenance, repair and overhaul (MRO) firms, yet their valuations were deemed too high for comparison. HD Marine Solutions' robust growth, profitability, stability and competitive edge warrant a premium compared to its peers."
 
HD Hyundai Marine Solution was established in 2016 as a spin-off from HD Hyundai Heavy Industries' after-service division for vessels. The company has steadily expanded its focus on aftermarket services, including ship docking, repair and modifications, reporting revenue of 1.4 trillion won and an operating profit of 201.5 billion won. It has diversified its business portfolio into environmentally friendly refurbishments, digital solutions and bunkering.
 
If the IPO goes as planned, HD Hyundai Marine Solution could earn around 320 billion won in proceeds, 40 percent of which it intends to allocate to the ship aftermarket sector — a cash cow responsible for around 40 percent of last year's revenue — to bolster its logistics infrastructure and to secure warehouse facilities both domestically and internationally.
 
"A logistics system that can supply parts as soon as ships arrive at ports is crucial for the ship aftermarket business," said Lee Ki-dong, president and CEO of HD Hyundai Marine Solution, during a press conference on April 3. "Despite the company's existing warehouses for overseas subsidiaries, over 40 percent of the IPO proceeds will be dedicated to expanding logistics infrastructure to support the aftermarket business."
 
President and CEO of HD Hyundai Marine Solution Lee Ki-dong speaks during a press conference at HD Hyundai's Global R&D Center in Seongnam, Gyeonggi, on April 3. [HD HYUNDAI]

President and CEO of HD Hyundai Marine Solution Lee Ki-dong speaks during a press conference at HD Hyundai's Global R&D Center in Seongnam, Gyeonggi, on April 3. [HD HYUNDAI]

 
HD Hyundai Marine Solution also plans to invest in expanding its digital presence and developing eco-friendly technologies in the maritime sector, such as OceanWise, a service that utilizes AI and big data to offer customized maritime data solutions for ship owners, cargo owners and port operators. HD Hyundai's vice chairman, Chung Ki-sun, personally introduced OceanWise at CES 2024, and in February, the company signed its first commercial supply contract for the service with Posco.
 
"OceanWise completed development by the end of last year, and has already been deployed commercially," Lee said. "The company plans to continue expanding implementation in the future."
 
Looking ahead, HD Hyundai Marine Solution aims to become a "total marine solution provider," managing the entire life cycle of ships.
 
"We see environmentally-friendly shipbuilding... And the maritime platform business will become a key driver for future growth and market dominance," Lee highlighted.
 
HD Hyundai's Digital Insight Center, which enables real-time monitoring of more than 430 ships around the world utilizing the company’s smartship solutions, at HD Hyundai Global R&D Center in Seongnam, Gyeonggi [HD HYUNDAI]

HD Hyundai's Digital Insight Center, which enables real-time monitoring of more than 430 ships around the world utilizing the company’s smartship solutions, at HD Hyundai Global R&D Center in Seongnam, Gyeonggi [HD HYUNDAI]

 
Book building for the IPO will take place from Wednesday to April 22, with subscriptions scheduled for April 25 to 26 and the listing set for May. KB Securities, UBS, and JP Morgan are lead underwriters, with Shinhan Securities and Hana Securities as joint underwriters.

BY SEO JI-EUN [[email protected]]
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