Hyundai Samho Heavy Industries Co., the world’s fourth largest shipbuilder affiliated to the largest shipbuilder Hyundai Heavy Industries Co., has decided to bump up its pre-initial public offer (pre-IPO) placement to 400 billion won ($356.9 million) to meet investors’ stronger-than-expected demand amid signs of recovery in the shipbuilding industry after a lengthy slump.

Hyundai Heavy Industries Group said on Thursday that it has agreed with local private equity firm (PEF) IMM Investment Corp. to stretch Hyundai Samho Heavy Industries’ pre-IPO offer from initial 300 billion won to 400 billion won.

In April, Hyundai Heavy Industries agreed with IMM Investment to hand over its 11.8 percent stake in its subsidiary Hyundai Samho Heavy Industries to the Korean-based PEF for 300 billion won. Under the deal, the PEF will acquire 5.36 million convertible preferred stocks that can be converted into new shares in Hyundai Samho Heavy Industries each at 56,000 won. IMM Investment will become the second single largest shareholder of Hyundai Samho Heavy Industries after its parent company Hyundai Heavy Industries when they are entirely converted.

But since the two signed a pre-IPO deal in April, demand for Hyundai Samho Heavy Industries’ premarket debut process has soared from other institutional investors. In response, IMM Investment has asked Hyundai Samho Heavy Industries to up the pre-IPO placement by 100 billion won to 400 billion won and plans to pool additional 100 billion won by the end of this month when the pre-IPO deal is to be complete.

Appetite for pre-IPO issues by the shipyard soared on signs of turnaround in the shipbuilding segment, an IMM Investment official said.

Hyundai Samho Heavy Industries posted a profit in the first quarter of this year ended March for the fifth quarter in a row, with 43 billion won in operating profit on sales of 734.3 billion won. For full 2016, it reported 171.5 billion won in operating income on sales of 3.9 trillion won last year. It secured 15 new shipbuilding orders worth $1.1 billion last year and this year won a $240 million worth order to build four liquefied natural gas (LNG)-fueled crude tankers from Russia’s state-run shipping company Sovcomflot.

The pre-IPO refers to raising funds prior to launching IPO that it commonly leads to an actual market listing within a few years. Industry observers expect Hyundai Samho Heavy insutries’ IPO would come around 2019. Its market value is estimated at around 2.5 trillion won.

By Moon Ji-woong

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