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Hyundai Eng seeks to raise up to $1 bn in Feb IPO

Hyundai Group Chairman Chung Eui-sun likely to sell around $340 mn worth of shares in the builder

By Dec 10, 2021 (Gmt+09:00)

2 Min read

(Courtesy of Hyundai Engineering)
(Courtesy of Hyundai Engineering)

Hyundai Engineering Co., part of South Korea's Hyundai Motor Group, will make a trading debut on the Korea Exchange next February, raising up to 1.2 trillion won ($1 billion), according to its registration statement filed on Friday.

The builder of apartments and infrastructure facilities plans to offer its shares for a total of 926.4 billion won to 1.2 trillion won in a public offering. Its affiliated companies and Hyundai Motor Group Chairman Chung Eui-sun will sell part of their shares in the IPO.

Hyundai Engineering will float 16 million shares at a price between 57,900 won and 75,700 won apiece, compared with its price of 110,000-120,000 won quoted in over-the-counter (OTC) markets.

The lower price band than its OTC market price shows the company's determination to succeed in the IPO, following in the footsteps of LG Energy Solution Ltd., said investment banking sources. 

LG Energy, an electric vehicle battery maker, is set to become the country's largest-ever initial listing next month to raise up to $10.8 billion. Its IPO will likely put its market cap at as much as 70 trillion won, below its estimated corporate value of 100 trillion won.

Hyundai Motor Group Chairman Chung Eui-sun
Hyundai Motor Group Chairman Chung Eui-sun

Based on the proposed price guidance, Hyundai Engineering's market capitalization will reach up to 6.7 trillion won ($5.7 billion), surpassing that of its parent company Hyundai Engineering & Construction Co. (Hyundai E&C) at 5.6 trillion won. Hyundai E&C is the top shareholder with a 38.6% stake.

Its estimated market cap is even more than double that of its domestic rivals -- Samsung Engineering Co. with 4.5 trillion won, Daewoo Engineering & Construction Co. with 2.5 trillion won and DL E&C Co. with 2.4 trillion won.  

Hyundai Engineering will use the IPO proceeds for eco-friendly businesses such as next-generation small nuclear reactors, plastic recycling and hydrogen generation from ammonia.

Chairman Chung, the second-largest shareholder in the builder, is expected to raise up to 404.4 billion won ($340 million) from the IPO, reducing his stake to 4.45% from 11.7% stake.

He will likely use the proceeds to increase his shareholding in Hyundai Mobis Co., the country's largest auto parts maker, in which Chung has a meager 0.3% stake.

Other units of the automotive group, including Kia Corp., Hyundai Mobis and the logistics company Hyundai Glovis Co., will also sell part of their Hyundai Engineering shares in the IPO.

Hyundai Engineering was merged into Hyundai E&C in 1999 and then was spun off in 2011. It absorbed another building company Hyundai AMCO Co. in 2014.

Its operating profit shot up 54.6% on-year to 314.2 billion won in the nine months to September of this year, with sales up 2.6% to 5.4 trillion won. New orders received were worth 10 trillion won during the same period, up 45% from a year earlier.

Bookbuilding is scheduled for Jan. 25-26, ahead of retail subscriptions on Feb. 3-4. Mirae Asset Securities Co, KB Securities Co. and Goldman Sachs are joint bookrunners of the IPO.

Write to Ye-jin Jun at ace@hankyung.com
Yeonhee Kim edited this article.
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