Hyundai Oilbank to start IPO process this month

South Korean refiner Hyundai Oilbank Co. plans to begin the process for a stock market listing in the first half of 2022 as early as this month with its corporate value estimated at around $8.5 billion.

The initial public offering is expected to draw strong demand from investors as the company is a key affiliate leading its parent Hyundai Heavy Industries Holdings Co.'s strategy to seek eco-friendly future businesses with strong profitability.

Hyundai Oilbank is considering filing for a preliminary review to the Korea Exchange later this month, according to investment banking industry sources on Dec. 2.

“It will file for the preliminary review as early as this month to begin the listing process,” said an industry source.

The company is expected to complete the IPO process and list as early as the first half of the next year since the review usually takes 45 working days.

Hyundai Oilbank aims to raise about 2 trillion won ($1.7 billion) with an enterprise value of 10 trillion won, according to the industry.

This is its third attempt at an IPO after aborting plans to list on the main Kospi in 2012 and 2019 amid unfavorable business conditions. Hyundai Oilbank has been preparing for the IPO, having selected NH Investment & Securities, KB Securities and Credit Suisse as lead managers in August of this year.

EARNINGS RECOVERY, FUTURE BUSINESSES

Hyundai Oilbank was confident of an earnings recovery on strong oil prices and the refiner’s push for future new businesses such as blue hydrogen to ramp up its corporate value. The company reported 851.6 billion won in operating profit with 14.6 trillion won in sales in the first three quarters of the year, swinging from an operating loss of 593.3 billion won last year.

Its plans to transform its business portfolio drew strong attention. Earlier this year, Hyundai Oilbank announced a strategy to reduce its refinery business from the current 85% of its portfolio to as low as 40% by 2030 to slash its carbon emissions and diversify its energy mix. It plans to seek three new businesses – blue hydrogen that collects and recycles carbon generated from hydrogen production facilities in the refinery; eco-friendly materials utilizing by-products of refining; and "white bio" fuel produced with biomass. Its blue hydrogen plant is scheduled to start operations in the first half of 2022 and produce gas for semiconductor manufacturing.

“Future business plans will be a key factor for IPO prices like Hyundai Heavy Industries Co.’s successful listing earlier,” said an executive who handles IPOs at a brokerage.

Hyundai Heavy Industries successfully went public on Sept. 17 by closing at almost double its IPO price.

The shipbuilder unveiled plans for investment in future businesses such as eco-friendly vessels, smart factories and the hydrogen infrastructure, attracting investors, analysts said.

Write to Tae-ho Lee at thlee@hankyung.com
Jongwoo Cheon edited this article.