Hyundai Heavy Industries Targets $950 Million from Stock Offering

Korean shipbuilder Hyundai Heavy Industries confirmed today the details of its long-anticipated initial public offering of stock. The company is targeting raising as much as $950 million that will be used to accelerate the move to advance new technologies for the shipping industry.

In January 2021, Hyundai announced plans for an initial public offering of the shipbuilding company’s stock. The IPO appears to be timed to take advantage of the current boom in the shipbuilding industry and the company’s growing backlog of orders. The Korean Stock Exchange approved the company’s listing plan on August 5, and today the company said it has proceeded with the filing. They anticipate presenting to prospective investors early in September and completing the offering by mid-month.

The Korean news agency Yonhap is reported that the proceeds from the IPO will be used to develop eco-friendly and autonomous ships and build smart shipyards as well as offshore hydrogen production plants. In a separate regulatory filing, the shipbuilder also reported that it would use approximately $40 million from the offering to repay outstanding debts.

During the first six months of 2021, Hyundai Heavy Industries reported that it won new orders for 50 ships worth $7.25 billion. According to recent press releases, the company exceeded its target of $6.25 billion in orders for the full year more than five months ahead of schedule. As of June, Korea Shipbuilding said that its combined order backlog stood at $32.8 billion, or 350 ships, which will require approximately two and a half years to fulfill.

Last year, Hyundai reported total revenues of $7.2 billion with a profit of more than $28 million from its shipbuilding operations. The company has cautioned that it expects a near-term decline in profits due to rising steel costs, but recently the major Korean shipbuilders began discussing raising prices for their constructions to address the increase in costs. 

The shipyard has been aggressively pursuing the development of new technologies focusing on smart ships and autonomous operations. In June, they demonstrated a pleasure draft remotely guided through the waterways in Korea and recently announced plans to operate the first ocean-going demonstration of an autonomously navigated LNG carrier either in the Pacific or Indian oceans before the end of the year.