Dubai sovereign fund injects $52 mn in debt-laden Ssangyong E&C

Ssangyong Engineering & Construction Co. has raised 62.1 billion won ($51.6 million) in a rights issue from its largest shareholder Investment Corporation of Dubai (ICD), a sovereign wealth fund of the United Arab Emirates. The rights offering took place at the end of December, an official at Ssangyong said.

ICD holds a 99.95% stake in the South Korean construction giant. It acquired the debt-ridden construction company in 2015 for around 170 billion won ($141.1 million) at the time.

Ssangyong E&C was hit hard by the pandemic as 40% of its sales are from overseas projects. During the first three quarters of 2021, the company’s cumulative sales were 1.5 trillion won while operating losses hit 23.9 billion won.

The construction company’s debt-to-equity ratio has risen from 281% as of end-2015, the time of IDC’s acquisition, to 516% as of end-September 2021. The rights offering will lower the ratio to around 300%, the Ssangyong E&C official said.

Last November, local media reported that Korean real estate developer DS Networks Co. was in talks with IDC to acquire Ssangyong E&C. This was falsely reported, the Ssangyong official told The Korea Economic Daily.

ICD is the world’s 11th-largest sovereign wealth fund, with more than 1 trillion dirham ($272.3 billion) in total assets as of June 2021. It invests in banking & finance services, transportation, hospitality, real estate & construction, industrial, oil & gas among other sectors.

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Jihyun Kim edited this article.