IMM puts Hyundai LNG Shipping on sale

IMM put Hyundai LNG Shipping, South Korea’s top liquefied natural gas (LNG) tanker operator, on sale in a predicted $1.7 billion deal.

IMM Private Equity and IMM Investment Corp. are processing the sale, while Citigroup Global Markets Securities is handling the deal. They are expected to receive preliminary bids as early as next month. HMM Co., Hyundai LNG Shipping’s original owner, and other major local companies that aims to make inroads into the shipping business are likely to consider buying the firm, according to the investment banking (IB) industry sources. The takeover is forecast to cost up to 2 trillion won ($1.7 billion) based on its enterprise value.

IMM Private Equity and IMM Investment bought a 100% stake in the LNG shipping unit from cash-strapped HMM for about 500 billion won in 2014. IMM injected 240 billion won in equity, while the state-run Korea Development Bank (KDB) provided the rest through acquisition financing. After that, HMM bought a 20% stake in the shipper again for 100 billion won, becoming the second-largest shareholder after the IMM consortium that has an 80%.

Hyundai LNG Shipping has been staying in the red since the consortium acquired, although its revenue rose to 187.3 billion won last year from 145.6 billion won in 2015. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) were around 20 billion won.

The sellers, however, expected the EBITDA to about triple, given the improving global shipping industry and increasing orders. Hyundai LNG Shipping won orders from major consignors in Europe and Southeast Asia, expanding its business to overseas markets. In May, for example, it signed a long-term charter contract for three LNG tankers with Malaysia’s state-run Petroliam Nasional Bhd's (Petronas) subsidiary Petronas LNG in May.

Write to Jun-ho Cha at chacha@hankyung.com
Jongwoo Cheon edited this article.