South Korea’s Hyundai Heavy Industries is set to raise KRW1.08trn ($935m) after pricing its initial public offering (IPO) at the top of its indicative range amid strong demand.
The 18m shares on offer have been priced at KRW 60,000 ($51.8) per share and are expected to list on the South Korea Stock Exchange on 16 September.
More than 1,600 institutional investors were reported to have shown interest in subscribing to HHI’s shares, according to media reports.
Mirae Asset Securities, Korea Investment & Securities and Credit Suisse Securities acted as co-managers for the IPO.
HHI plans to use as much as 70% of the proceeds to fund investments in new technology and eco-friendly ship technologies.
Yonhap reported that HHI plans to use KRW 310bn of the funds raise for the development of eco-friendly and autonomous ships, while KRW 320bn is set for building smart shipyards. It will further use KRW 130bn for offshore hydrogen production plants.
In a previous regulatory filing, HHI said it would also be using KRW 47bn of the raised funds to repay its debts.
HHI recorded KRW 3.9trn in revenue for the first half of this year and an operating loss of KRW 394bn versus revenue of KRW 8.3trn and an operating profit of KRW 32.5bn in the corresponding period in 2020.
Surging steel plate costs were said to be one of the main factors behind HHI's poor earnings. The price of steel plate has jumped from last year’s $ 600-per-tonne to the current level of around $950.
HHI has already exceeded its $7.2bn sales target for 2021 with orders for 50 new vessels secured so far this year.
The Ulsan-based shipyard along with Hyundai Samho Heavy Industries and Hyundai Mipo Dockyard are under Korea Shipbuilding & Offshore Engineering Co (KSOE) - the shipholding arm of Hyundai Heavy Industries Holding.
KSOE plans to take a 55.72% stake in DSME, but still needs anti-trust approval from the European Union.
