State-owned Korea Development Bank (KDB) has begun the process of selling management rights in giant shipowner HMM.
Privatisation of the South Korean container ship and VLCC player with a market cap of KRW 11 trillion ($8.45bn) is moving forward with the formation of an advisory group in collaboration with state fund Korea Ocean Business Corp (KOBC), KDB said.
Both organisations are shareholders in HMM.
KDB took over management rights following a liquidity crisis at Hyundai Group in 2016.
Outside companies will be brought in to advise on sales, accounting and legal affairs. KDB will receive proposals by 20 March for the composition of this group.
“Once the advisory group is formed, we will discuss overall strategies and then set a practical schedule for the sale of HMM through consultations with related organisations,” a KDB official told BusinessKorea.
HMM originated from Asia Merchant Marine, founded by Hyundai Group in 1976, when ships built by Hyundai Heavy Industries were not delivered because of the oil shock.
The shipowner changed its name to Hyundai Merchant Marine in 1983 and then to HMM in 2020.
The group survived a credit crunch in which its main rival, Hanjin Shipping, went under in 2017.
Earnings bonanza
It has since made huge profits during the container ship boom caused by the pandemic, and has invested in giant new boxships, as well as VLCC newbuildings.
South Korean media has speculated that logistics companies LX Pantos, CJ Logistics and Samsung SDS, shipowner Hyundai Glovis and container ship rival SM Line could be in the frame to take over HMM.
Any sale will ultimately depend on the shipping and equity markets, the government has said.
KDB holds the largest stake of 20.69%. KOBC has 19.96% and Korea Credit Guarantee Fund 5.02%.
The market cap has soared from $6.4bn in October, while the fleet value has dropped.
The 50 ships were worth $8.75bn at that point. VesselsValue now assesses the fleet at $7.2bn.
Japanese investment bank Nomura has warned that HMM could be in the red by as early as 2024 on the back of the steep decline in the Shanghai Containerized Freight Index.
It will probably start posting operating losses from the second half of this year, Nomura argues.
