GS E&C eyes IPO of its Spanish subsidiary GS Inima on Kospi

South Korea’s GS Engineering & Construction Co. has embarked on a process to list its water treatment subsidiary in Spain on the nation’s main Kospi bourse to use the proceeds to invest in new businesses.

GS E&C named Korea Investment Securities as its lead initial public offering (IPO) underwriter to debut its Spanish subsidiary GS Inima Environment S.A. on the Korean market, according to sources from the investment banking industry on Thursday.

It has not set detailed timeline for the company’s market debut because of the difficulties in conducting due diligence in Spain due to the virus outbreak.

GS Inima is engaged in seawater desalination and sewage purification business. GS E&C had bought a partial stake in the company in 2012 and purchased the remaining stake two years ago to fully own it. The constructor once considered selling the subsidiary when it went through financial problems, but the business is now regarded as one of the promising future growth drivers of the company.

GS Inima posted 287.8 billion won ($257.7 million) in sales and 23.5 billion won in net profit in 2019. From January to September last year, it recorded 222.9 billion won in sales and 22.1 billion won in net income. Its earnings for this year are expected to exceed those for the previous year, market experts estimated.

GS E&C hoped to use the IPO proceeds to invest in new businesses including water treatment, housing modular and urban development project in Vietnam. GS Inima is likely to go public on the Kospi market through a special purpose company just like LS Cable & System Asia and Doosan Bobcat debuted on the Kospi in 2016.

Market analysts value GS Inima at around 1 trillion won given the domestic market’s high appreciation in builders engaging in the water treatment business. Korea Investment Securities reportedly valued the company at 1.5 trillion won, according to sources.

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