IMM increases commitment to Korean shipbuilder

IMM had already committed KRW300 billion to the company in April for 5.4 million new shares ahead of HSHI’s planned IPO. According to a statement, IMM proposed increasing the investment due to co-investment inquiries from institutional investors following the earlier announcement. The firm said it has already secured KRW50 billion for the deal and expects to acquire the remainder by the end of the month.

IMM’s investment reflects its belief that Korea’s shipbuilding industry is headed toward recovery after several years of struggles industrywide due to decline in global demand following the global financial crisis. One of HSHI’s industry peers, Daewoo Shipbuilding and Marine Engineering, is trying to stay afloat until a promised KRW2.9 trillion government bailout comes through.

“HSHI is number one, they have the scale, and if anyone is going to survive the downturn it’s them,” a person close to the transaction told AVCJ after the earlier announcement. “So with a good valuation, this is the right time to go in.”

HSHI claims to have seen strong performance despite the shipbuilding industry’s woes. The company claims to have posted profits for five consecutive quarters, including the first three months this year when it reported KRW734 billion in revenue and KRW43 billion in operating profit. Last year it received orders for 15 new ships, valued at $1.1 billion in total, and earlier this year received a $240 million order for four ships from Russian state-owned shipping company Sovcomflot.

HSHI will use proceeds from the deal to pay down its debt. The company expects to reduce its debt to equity ratio to 72.8% following the investment.

Currently, IMM is investing its third Korea-focused fund, which it closed last year at KRW1.25 trillion. 

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• Topics
• North Asia
• Industrials
• Expansion
• South Korea
• manufacturing
• IMM Investment