Hanwha Solutions to raise $491 mn with materials unit split-off

South Korea’s Hanwha Solutions Corp. is set to split off its advanced materials business and sell a stake in the unit to raise $491 million for investments at home and abroad.

Local private equity firm Glenwood PE plans to buy a 49% stake in the division for 600 billion won ($491.4 million), becoming its second-largest shareholder after Hanwha, according to investment banking industry sources on Tuesday.

Hanwha and Glenwood reportedly estimated the unit’s value at 1.2 trillion-1.3 trillion won. The energy unit of chemicals-to-financial conglomerate Hanwha Group had initially aimed to raise 300 billion won from the PE firm but the improvement in the division’s earnings last year allowed the company to secure more money.

The advanced materials unit was estimated to have turned to the black last year with a predicted operating profit of around 10 billion won on a 25% growth in sales to 939 billion won, according to analysts.

Hanwha, launched in 2020 with combinations of the group’s affiliates, is currently engaged in renewable energy through Q Cells, chemical, advanced materials, department stores and real estate development businesses. The advanced materials division makes products for the automotive, solar and electronics industries.

NEEDS MONEY FOR INVESTMENTS

Investors had not welcomed the split-off plan in September last year when the decision was first disclosed, with Hanwha’s stock prices down to the low-30,000 won level from mid-40,000 won. But the split-off is expected to improve the company’s financial structure and provide money for investments since the unit is not a core business, some analysts said.

“It will be positive to focus on the solar power business, the mid-to-long-term growth engine, by securing cash through the sale of the unit for shareholders’ value,” said Kang Dong-jin, an analyst at Hyundai Motor Securities.

Hanwha has come under financial pressure, given its recent investments.

Since November of last year, the company has secured a 21.34% stake in Norway-based polysilicon manufacturer REC Silicon ASA through two rounds of investments of 245 billion won to ensure stable procurement of solar cell materials in the US. Hanwha also signed a deal to acquire a 100% stake in RES Mediterranee SAS, a French wind and solar power plant operator, for 984.3 billion won in August 2021.

Meanwhile, Hanwha has recently raised 600 billion won through the sale of a 49% stake in its polyvinyl chloride (PVC) unit in Ningbo, China, to a South Korean PE firm.

Write to Si-Eun Park and Jun-Ho Cha at seeker@hankyung.com
Jongwoo Cheon edited this article.