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Hyundai Engineering CEO: To spend $1.3 bn on green projects with IPO

If the IPO succeeds, the company’s enterprise value will surpass that of its parent company

By Jan 26, 2022 (Gmt+09:00)

2 Min read

Hyundai Engineering CEO Kim Chang-hag
Hyundai Engineering CEO Kim Chang-hag

Hyundai Engineering Co., the plant engineering and construction unit of South Korea’s Hyundai Motor Group, plans to spend as much as 1.5 trillion won ($1.3 billion) on energy and other green projects with funds raised via its planned initial share sale.

With the investment, the company aims to have eco-friendly businesses account for 10% of its total annual sales by 2025, Chief Executive Kim Chang-hag said in a media briefing on Tuesday.

Specifically, the CEO said the company will invest 530 billion won in the plastic waste recycling business and 350 billion won in projects related to carbon dioxide capture and use.

Hyundai Engineering, which has been striving to transition into an eco-friendly company for sustainable growth, recently said it is reorganizing its business structure with a focus on eco-friendly projects such as hydrogen and mini reactors.

The company is particularly expanding its blue hydrogen and micro modular reactor (MMR) businesses, it said.

Of its consolidated revenue of 5.4 trillion won in the first nine months of 2021, building and housing works accounted for 46%, followed by plant engineering and infrastructure construction at 42%.

Hyundai Engineering
Hyundai Engineering

ADDITIONAL M&A IN THE OFFING

Last week, Hyundai Engineering said it has secured exclusive engineering, procurement and construction rights for micro modular reactor projects of Canada’s Ultra Safe Nuclear Corp.

“With the investment, we’re also considering acquiring other overseas eco-friendly business operation rights or buying a waste treatment company,” he said.

The company is working on an IPO next month to raise funds for its eco-friendly projects.

The two-day bookbuilding with institutional investors will be completed on Wednesday, and retail subscriptions are slated for Feb. 3-4. Mirae Asset Securities Co. and KB Securities Co. are the lead managers, with five other brokerages such as Samsung Securities Co. playing as co-underwriters.

The unlisted company plans to float 16 million shares at a price between 57,900 won and 75,700 won apiece on Korea’s main bourse to raise as much as 1.2 trillion won. About 70% of the 16 million shares on offer are shares held by existing shareholders.

Hyundai Engineering's plant engineering business
Hyundai Engineering's plant engineering business

If priced at the top end of the indicative range, Hyudai Engineering’s enterprise value will reach between 4.63 trillion won and 6.05 trillion won, surpassing the 4.5 trillion won in market capitalization of its parent Hyundai Engineering & Construction Co.

Hyundai Motor Group Chairman Chung Euisun and honorary Chairman Chung Mong-koo will also sell part of their shares in the IPO. They are expected to raise a combined 512 billion won from their share sale.

Chairman Chung is widely expected to use the proceeds to increase his shareholding in Hyundai Mobis Co., which is at the center of the group’s cross-shareholding and the country's largest auto parts maker, in which the group leader has a meager 0.3% stake.

Write to Ye-jin Jun at ace@hankyung.com
In-Soo Nam edited this article.
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