IMM consortium owns 100% of Hyundai LNG Shipping; Stake sale eyed

A consortium of IMM Private Equity Inc. and IMM Investment Corp. has secured full ownership of Hyundai LNG Shipping, South Korea’s top liquefied natural gas (LNG) tanker operator, stoking speculation that a renewed sale of the LNG tanker operator could be on the horizon.

The consortium, which first acquired Hyundai LNG Shipping from HMM Co., formerly Hyundai Merchant Marine, in a 1.5 trillion won ($1 billion) deal in 2014, recently increased its stake to 100% from 79.23%, according to investment banking industry sources on Monday.

The stake increase results from Hyundai LNG Shipping retiring a tranche of redeemable convertible preference shares (RCPS) after purchasing the shares from Daishin Private Equity (Daishin PE) and other investors.

According to a recent public disclosure filed with financial regulators, Hyundai LNG Shipping bought back and cancelled 2.63 million RCPS, equivalent to a 20.77% stake in the company, for 173.3 billion won. This raised the IMM consortium’s ownership from 79.23% to 100%.

The RCPS had been issued during a 150 billion won investment round in 2022 that included Daishin PE and Meritz Securities Co. The transaction was tied to a refinancing of the acquisition debt used by the IMM consortium to fund the original purchase.

SETTING THE STAGE FOR NEW STAKE SALE

Industry watchers said IMM’s full ownership of Hyundai LNG Shipping will set the stage for a fresh attempt to offload the LNG shipping operator, especially given improved market conditions and the company’s sharply rebounding earnings.

In 2023, IMM, a Seoul-based private equity firm, explored a sale of Hyundai LNG Shipping, with HMM emerging as the top negotiator, but talks collapsed over valuation disagreements.

At the time, IMM PE was said to be targeting a sale price of around 800 billion, including a management control premium.

Market chatter now suggests that Hyundai LNG Shipping could command an even higher price, with the latest transaction implying the shipper’s corporate value at around 830 billion won.

Hyundai LNG Shipping posted strong financial results last year, with revenue up 36% from the previous year to 460.4 billion won and operating profit surging 291% to 100.7 billion won, helped by the buoyant shipbuilding and LNG transport sector.

Hyundai LNG Shipping is the country’s top player in the LNG transport business, operating a fleet of high-specification LNG carriers under long-term contracts.

Analysts say the company’s stable cash flow and sector tailwinds make it an attractive target, especially as global energy markets remain in flux.

Write to Seok-Cheol Choi at dolsoi@hankyung.com

In-Soo Nam edited this article.