South Korea Capital Markets Deal: HD Hyundai Marine Solution’s W742bn IPO
The W742bn (US$511m) IPO of HD Hyundai Marine Solution, the country’s largest in more than two years, sailed through market weaknesses thanks to strong backers and impressive fundamentals.
The South Korean IPO market was busy with small deals in 2024, but some of the bigger transactions were postponed as there was a valuation mismatch between issuers and investors.
HD Hyundai Marine Solution, with its high-quality backers and strong fundamentals, managed to persuade investors to participate in Korea’s largest IPO since LG Energy Solution’s W12.8trn float in January 2022.
Founded in 2016, HD Hyundai Marine Solution is majority owned by conglomerate HD Hyundai, and US private equity firm KKR also owned a 38% stake in the company before the IPO.
The company, which provides marine after-sales and retrofit services, benefited from its strong business performance. It posted net income of W159.5bn for the first nine months of 2024, up 34.8% from W118.3bn a year earlier. Its revenue was W1.28trn, up 22.8%.
Given this backdrop, the deal drew immediate attention from global investors when the terms were first announced in March, receiving strong indications of interest even before the books opened in April.
The IPO comprised 8.9m shares (50% primary/50% secondary) in an indicative price range of W73,300–W83,400. KKR entity Global Vessel Solutions was the seller.
More than 2,000 institutional investors participated in the IPO, collectively bidding for 984.5m shares, or 200 times the 4.9m shares on offer in the institutional tranche. More than 90% of the investors indicated a willingness to buy shares above the top of the price range.
On the back of the upbeat demand, the deal was comfortably priced at W83,400, the top of the range.
The international books were multiple times covered with strong support from global hedge funds, long-only investors and sovereign wealth funds. Allocations were skewed towards long-only investors, who took 62% of the institutional tranche, with sovereign wealth funds buying 20% and hedge funds 18%.
Overall, HD Hyundai Marine Solution sold 55% of the shares to institutional investors, 26.4% to retail and 18.6% to an employee stock ownership plan.
The trading debut on May 8 was remarkable, with the stock soaring 96.5% to close at W163,900, giving the company a market value of around US$5.1bn.
The aftermarket performance remained steady throughout the year, even as global investors fretted over fears of a US recession and local political turmoil increased market volatility.
The stock finished IFR’s review period at W161,400 – still 93.5% above the issue price.
KB Securities, JP Morgan and UBS were the joint global coordinators.
To see the digital version of this report, please click here
To purchase printed copies or a PDF, please email shahid.hamid@lseg.com