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Capital increase

Hanwha Solutions to sell $1.3 bn new shares in clean energy push

Feb 15, 2021 (Gmt+09:00)

Hanwha Solutions' solar-to-hydrogen cells
Hanwha Solutions' solar-to-hydrogen cells

Hanwha Solutions Corp. plans to raise 1.41 trillion won ($1.3 billion) in a rights offering next month following more than a five-fold jump in its share price over the past 11 months. Abundant market liquidity and the upbeat outlook for its eco-friendly energy business have fueled its share price rally, alongside other renewable energy providers in South Korea.

Hanwha Solutions, 37.25% owned by Hanwha Corp., is offering 31.4 million new shares, equivalent to 19.5% of its total shares in circulation, tentatively for 44,900 won per share. The selling price represents a 14.5% discount from Monday’s closing price of 52,500 won. It will fix the offering price on Feb. 19, ahead of the public subscription Feb. 24-25.

The company will use the proceeds for facility investment in relation to solar energy and hydrogen fuel businesses, as well as mergers or acquisitions.

The South Korean solar module manufacturer stands to benefit from the government’s Green New Deal initiative, a multibillion-dollar plan to invest in green infrastructure, clean energy and eco-friendly vehicles. The inauguration of Joe Biden, a clean energy advocate, as US president further brightened its overseas business outlook.

Hanwha ranks top in the US residential and commercial solar module markets with more than a 20% share in both markets as of the third quarter of last year.

Shares in Hanwha Solutions have soared by more than five-fold since sliding to 9,410 on March 23 of last year when the benchmark Kospi index tumbled to a one-year low. Since the announcement of its capital increase plan in late December, its shares have gained an additional 14%, despite slipping by 1.7% on Monday to close at 52,500 won. In comparison, the broader market added 1.5% on Monday. 

Just two years ago centered on the petrochemicals and materials businesses, Hanwha Solutions is now focused on green industry investment to expand its renewable energy business value chain, including solar power and hydrogen ventures. The share prices of Hanwha Solutions and its affiliates have spiked since last year.

GREEN NEW DEAL

The Moon Jae-in government declared in October 2020 that the country will go carbon neutral by 2050, bringing it into line with other major economies. He vowed to end the country’s dependence on coal and replace it with renewables. As part of the government initiative, the country plans to reduce its greenhouse gas emissions by 37% from current levels by 2030.

Expectations about the Green New Deal project have encouraged other power-generating companies in Korea to also bolster their capital bases with new share sales.

Doosan Heavy Industries & Construction Co. and Doosan Fuel Cell Co. raised 1.2 trillion won and 336 billion won, respectively, in rights offerings late last year. 

Korea-based wind tower manufacturer CS Wind Corp. completed its 467.4 billion won rights issue earlier this month. It will spend the proceeds on the construction of two wind tower production facilities in the US.

Hanwha Corp., Hanwha Solutions' largest shareholder, will subscribe to the latter's new shares, according to the proportion of its ownership, for 418 billion won. After the right issue, its stake will be diluted to 36.00%. Its existing shareholders will be entitled to 0.1565 of a stock per share.

Accelerating its push into eco-friendly energy, Hanwha Solutions acquired a 100% stake in Cimarron Composites LLC, a US hydrogen storage tank manufacturer, last December. The takeover will help Hanwha secure advanced technology in hydrogen tanks for vehicles, hydrogen transportation trailers and high-pressure tanks for charging stations, the company said at the time.

By Jin-Seong Kim

jskim1028@hankyung.com 

Yeonhee Kim edited this article.

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