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Pre-IPO share sale

KKR signs $580 mn share purchase of Hyundai Heavy’s A/S arm

Feb 23, 2021 (Gmt+09:00)

KKR signs 0 mn share purchase of Hyundai Heavy’s A/S arm
KKR & Co. signed a definitive agreement on Tuesday to buy a stake in Hyundai Global Service Co. from Hyundai Heavy Industries Holdings Co. for 646 billion won ($580 million), as a pre-IPO investment in the ship maintenance and repair services company.

Under the deal, the US private equity firm will secure a 38% stake, or 1.25 million shares, in the spin-off of Hyundai Heavy Industries, valuing the South Korean company at around 2 trillion won, according to Hyundai Heavy.

The world's largest shipbuilder's holding company approved of the stake sale earlier in the day to raise fresh capital for new business investment. It will hold the remaining 62% stake after the share sale, Hyundai Heavy said in a regulatory filing.

Hyundai Global provides maintenance, repair and reconstruction services of ships built by Hyundai Heavy Industries.

Along with the sale proceeds of 646 billion won, Hyundai Heavy received 150 billion won in dividends from the A/S service arm on Tuesday. It will spend the 796 billion won on new growth areas such as the robotics, artificial intelligence and hydrogen businesses.

“With these proceeds, we will concentrate on growing future businesses as a holding company and look forward to the next Hyundai Global Service," Hyundai Heavy said.

Hyundai Global's operating profit nearly trebled to 156.6 billion won last year, compared with 56.4 billion won in 2017. Its 2020 sales reached 1 trillion won, up from 809 billion won a year earlier.

With the investment, KKR will help boost the value of the vessel A/S service company by utilizing its global network and management know-how, which both companies expect to lift Hyundai Global’s enterprise value three to fourfold.

Write to Kyung-min Kang at kkm1026@hankyung.com

Yeonhee Kim edited this article.

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