Hanwha Solutions eyes $300 mn green dim sum bond issue

Hanwha Solutions Corp., a South Korean petrochemical and renewable energy company, plans to raise 2 billion yuan ($300 million) in a green bond issue denominated in the Chinese currency, in its first-ever foreign currency bond sale.

The unit of South Korea's defense-to-insurance conglomerate will issue the dim sum bond, or a Chinese-currency bond issued by a non-Chinese entity outside mainland China, in late May at the earliest, according to investment banking sources on Apr. 11.

It recently picked Standard Chartered Securities as the underwriter of the bond with a maturity of three years and kicked off the bond issuance process, including rating the new issue by global rating agencies. It will channel the proceeds into eco-friendly energy segments such as solar and hydrogen fuel.

The debt financing plan follows the 1.3 trillion won rights offering by Hanwha Solutions in February of this year. It had allocated 1 trillion won from the new share issues into research and development for next-generation solar energy materials, compared to its 2020 spending of 124.8 billion won on solar energy R&D. It had earmarked the remainder from the rights issue for the green hydrogen segment.

If the dim sum bond sale takes place as planned, Hanwha will likely become the first Korean company to tap into the Chinese bond market after the state-run Export-Import Bank of Korea (KEXIM). KEXIM returned to the dim sum bond market in February of this year for the first time in three years to raise 1.5 billion yuan in a three-year note. The new bond was priced at 2.8%, below its initial guidance of 3.125%.

Hanwha Solutions' business is made up of chemical, solar energy, and advanced materials. Starting this year, it plans to invest 2.8 trillion won, including February's capital increase, into eco-friendly operations over the next five years.

It has been nurturing renewable energy as one of its new growth areas through aggressive investments and acquisitions, along with its flagship and cash-cow petrochemical business.

Last December, Hanwha Solutions purchased a 100% stake in Cimarron Composites LLC, a US hydrogen storage tank manufacturer, in which it plans to invest a total of $100 million, including the acquisition price, by 2025.

Hanwha Solutions' operating profit leapt by 29.4% to 594.1 billion won ($528 million) in 2020 from a year earlier and is expected to surge 55% to 920 billion won this year, according to analysts from Korean brokerage houses.

Last year, three Hanwha units -- Hanwha Solutions, Hanwha Aerospace Co. and Hanwha Corp -- were among the top 10 Korean companies with the highest R&D ratios against sales.

Write to Jin-Seong Kim and Hyun-il Lee at jskim1028@hankyung.com
Yeonhee Kim edited this article.