HHI Holdings sells 38% stake in Hyundai Global Service to KKR

Hyundai Heavy Industries (HHI) Group sold 38 percent stake in wholly-owned vessel after-sale service unit Hyundai Global Service to U.S. private equity giant KKR & Co. for 646 billion won ($582.3 million) in a kind of pre-IPO funding.

Hyundai Heavy Industries Holdings said in a regulatory filing on Tuesday that it signed a contract to sell 1.52 million shares in Hyundai Global Service to Global Vessel Solutions L.P., a fund under KKR, for 646 billion won after its board of directors approved the plan.

Separately, the parent will collect 150 billion won in cash dividend from the engineering service unit that reported 157 billion won in operating profit on sales of 1 trillion won in 2020.

The total 800 billion won raised for Hyundai Global Service will go to upscaling the company’s capabilities with AI and green solutions for after-sale repair and maintenance as well as vessel designing. Some of the new funding may also go to finance the group’s purchase of Doosan Infracore Co. whose final contract was signed on Feb. 5 for 850 billion won.

Shares of Hyundai Heavy Industries closed Wednesday 2.9 percent lower at 271,500 won.

In fund-raising due diligence, KKR estimated the value of Hyundai Global Service at 2 trillion won, given its growth potential from business diversification, according to sources.

“The contract will lay the foundation for Hyundai Global Service to boost its corporate value by three to four times,” said an official from HHI Holdings. “We will continue to perform our duty as a holding entity to find next Hyundai Global Service.”

Hyundai Global Service was founded in 2016 after it was spun off from Hyundai Heavy Industries in group-wide reorganization to separate shipbuilding and other businesses.

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