Aramco-backed Hyundai Oilbank wins prelim nod for H2 IPO

South Korea's Hyundai Oilbank Co. on Wednesday won preliminary approval for an initial public offering on the Korea Exchange, which may provide its No. 2 shareholder Saudi Aramco with an opportunity to reduce its 17% stake.

The third-largest refiner in South Korea is expected to release its price guidance next month and make a debut on the main Kospi bourse between September and October.

Aramco, a state-owned oil giant, had bought a 17% stake in Oilbank, the unit of the Hyundai Heavy Industries Group, for 1.4 trillion won ($1 billion) in 2019.

HD Hyundai Co., the shipbuilding group’s holding company, owns a 73.85% stake in Oilbank.

Last December, Palantir Technologies Inc., a US big data analytics startup, purchased a $20 million worth of shares in Oilbank, which Aramco had valued at 8.1 trillion won ($1.4 billion) in 2019, just before the Korean refiner applied for an IPO.

Analysts now value Hyundai Oilbank at around 10 trillion won, after the company made a turnaround on the back of rising refining margins.

In 2021, Oilbank swung to an operating profit of 1.1 trillion won, versus the shortfalls of 593 billion won the year previous. Its first-quarter operating profit of 704 billion won is more than half of that for the full year of 2021.

By comparison, its smaller rival S-Oil Corp. is valued at 11.7 trillion won as of Thursday. Its 2021 operating profit was 2.3 trillion won, double Oilbank’s.

In view of the market cap of S-Oil, a majority-owned by Aramco, analysts say Oilbank’s corporate value is unlikely to exceed 10 trillion won.

Oilbank is trying to restructure its refining-heavy business portfolio. It plans to use fresh capital from an IPO for eco-friendly energy businesses such as white biotechnology, which uses biotechnology in industrial processes; eco-friendly chemical materials; and blue hydrogen, or hydrogen produced from natural gas.

NH Investment & Securities Co., KB Securities Co. and Credit Suisse are joint bookrunners for Oilbank’s IPO.

Write to Ye-Jin Jun at ace@hankyung.com
Yeonhee Kim edited this article