South Korean shipyards and shipowners will raise billions of dollars via new stock market listings later this year. The yards hope to capitalize on the start of a shipping “supercycle” and a red hot stock market.
Hyundai Heavy Industries (HHI), HLine Shipping, and SM line are planning stock market IPOs that are expected to generate over $3 billion in capital this fall. Some investment bankers with knowledge of the deal believe we are entering a supercycle for the shipping sectors after a decadelong slump and these IPOs could generate significant profits for investors.
“Investor sentiment on the sector is improving fast as the industry enters an upcycle,” a South Korean investment banker told Financial Times on Monday. “We expect strong demand for the IPOs as growth is expected with higher vessel price and shipping rates.”
According to Clarksons Research ship orders doubled globally in the first quarter compared to one year ago and Korean shipyards won more than half those orders. Hyundai specifically has won 42 ship orders so far in 2021 worth $5.9bn compared to $3.5bn for all of last year.
According to HHI’s IPO prospectus, proceeds from the IPO will be spent expanding production facilities, improving the shipyard’s carbon footprint, and developing new ecofriendly ship designs.
FT expects HLine will raise $540m to $809m and SM Shipping is hoping to raise over a halfbillion dollars.
These IPOs are expected to launch in September or October this year.
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