KKR commits $723m to Korean shipping services business
KKR has made a pre-IPO investment of KRW800 billion ($723 million) in Hyundai Global Service (HGS), the aftersales marine services arm of Korean shipbuilder Hyundai Heavy Industries Holdings (HHIH).
The private equity firm has agreed to take a 38% stake at a valuation of approximately KRW2 trillion, according to a statement. The commitment comes from its Asia private equity fund. KKR is currently raising its fourth pan-regional vehicle, which has a target of $12.5 billion. As of September 2020, it had secured approximately $13.1 billion in commitments.
Spun out by HHIH in 2016, HGS is a one-stop consulting, engineering and maintenance provider. Services span the provision of spare parts for ship engines, retrofitting, installation and modification of eco-friendly equipment, digital transformation and technology consultation, and fuel bunkering.
The company generated KRW809 billion in revenue last year, up from KRW414.5 billion 21 months earlier. Over the same period, net income rose from KRW54.3 billion to KRW89 billion.
HHIH, which reported KRW26.6 trillion in revenue for 2019, has interests across shipbuilding and engineering, industrial equipment and power solutions, and energy and chemicals. HGS is part of a portfolio of support and services businesses that also include engineering consulting, operations and maintenance, and the Hyundai Tigers football club.
“Building on this investment, we will focus on fostering new business such as robots, artificial intelligence and carbon energy as a holding company, and continue to seek global services which will become the second Hyundai Global Service,” an HHIH official said, adding that there is scope for the business to grow 3-4-fold in value.
KKR has committee nearly $2 billion in equity in Korea since 2009. The Korea portfolio currently includes e-commerce platform Tmon, which recently closed a KRW305 billion pre-IPO round, and automotive parts supplier LS Automotive.
LS Automotive was one of two assets KKR carved out from LS Group in 2017 in a KRW1.1 trillion deal. It exited the other business, copper components supplier KCF Technologies, in 2019 with a 6.5x return.
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