KIC, Hyundai Heavy to co-invest $900 mn in growth firms

The sovereign wealth fund Korea Investment Corporation (KIC) will make co-investments worth up to 1 trillion won ($900 million) alongside the Hyundai Heavy Industries Group in foreign companies with growth businesses such as artificial intelligence, robotics, bio and hydrogen cells.

The two South Korean entities signed a preliminary agreement on the co-investment at Hyundai's headquarters on Mar. 24, attended by KIC Chief Executive Choi Hee-nam and Chung Ki-sun, senior vice president of Hyundai Heavy Industries Holdings Co.

They will target sector-leading companies in AI and robotics, digital healthcare, autonomous shipping and hydrogen fuel cells, either for management buyouts or minority stake purchases. 

“Cooperation with the Hyundai Heavy Industries Group, a leader in shipbuilding, machinery and energy, will be of great help to strengthen our deal sourcing capabilities and research on the relevant sectors,” KIC's Choi said in a statement. “KIC will further explore co-investment opportunities with financial institutions and private sector companies.”

Hyundai Heavy, the world's largest shipbuilder, expects to take advantage of the sovereign wealth fund's broad overseas network when looking for acquisition targets.  

"Hyundai Heavy Industries Group's corporate value depends on future growth drivers," Hyundai's Chung said in the statement. "Acquiring global companies is our first step in realizing our new business plans." 

Chung, the eldest son of the shipping group’s largest shareholder Chung Mong-joon, tapped the KIC to propose a co-investment partnership. As head of the group's future committee composed of approximately 30 employees in their thirties, Chung, 39, has been spearheading the group's aggressive advance into construction machinery, robotics and autonomous shipping since 2018.

For digital healthcare service, it joined hands with Kakao Corp., South Korea's dominant mobile messenger app provider and Asan Medical Center, one of the country’s biggest general hospitals.

In December last year, Hyundai Heavy set up an AI-based autonomous shipping technology company.

Earlier this month, Hyundai Heavy signed a preliminary agreement with Saudi Aramco, a global oil producer, to initiate a global project for hydrogen production.

Once the group completes its acquisitions of both Daewoo Shipbuilding & Marine Engineering Co. and Doosan Infracore Co., Chung is likely to be named its chief executive and may change the group name away from Heavy Industries to reflect its diversified business portfolio, according to industry sources.

During the CES 2022 early next year, he plans to unveil the group’s robotics business to become the first shipbuilder to advance into the robotics market.

Meanwhile, Hyundai Heavy Industries Group Chairman Kwon Oh-gap was re-appointed for a second two-year term on Wednesday, subject to the shipbuilder's Mar. 25 annual shareholder meeting.

Write to Man-Su Choe at bebop@hankyung.com
Yeonhee Kim edited this article.