Aramco-backed Hyundai Oilbank drops IPO on market downturn

Hyundai Oilbank Co., a South Korean refiner backed by Saudi Aramco, withdrew its plan for an initial public offering as local stock markets tumbled, souring investor sentiment on a listing, due to rising interest rates amid surging inflation and fears over a global recession.

Hyundai Oilbank, whose No. 2 shareholder is Aramco with a 17% stake, said on Thursday its board of directors has decided to drop the IPO considering the current stock markets and share prices of its local peers.

The Kospi has lost about 30% in the last one year. Such a poor performance has already caused other companies such as SK Shieldus Co., a security service provider, and Hyundai Engineering Co., the plant engineering and construction unit of Hyundai Motor Group, to cancel their listings.

HARD TO BE FAIRLY VALUED

“It was hard to push for an IPO anymore in the current market situation where it is difficult to be recognized for a fair value despite strong earnings,” said a source at Hyundai Oilbank, a unit of Hyundai Heavy Industries Group.

“The healthy earnings will allow the company to keep improving the financial structure and investing in future businesses such as petrochemical materials, biofuels and hydrogen business although we decided to drop a listing.”

The refiner reported record earnings last year with an operating profit of 1.1 trillion won ($872.5 million) and sales of 20.6 trillion won on a consolidated basis. In the first quarter of 2022, it logged 704.5 billion won in profit based on revenue of 7.2 trillion won.

Last month, Hyundai Oilbank won preliminary approval for an IPO on the Korea Exchange, which may provide Aramco with an opportunity to reduce its stake. The world’s largest energy company owned by Saudi Arabia bought the stake for 1.4 trillion won in 2019.

Write to Ye-Jin Jun at ace@hankyung.com
Jongwoo Cheon edited this article.