Hyundai Engineering picks Mirae Asset, KB, Goldman Sachs to lead IPO

[Photo by Hyundai Engineering Co.]

Hyundai Engineering Co., the plant engineering affiliate of South Korea’s Hyundai Motor Group, has kicked off the process of an initial public offering with an estimated market capitalization of around 7 trillion won ($6 billion) after picking lead IPO underwriters.

Hyundai Engineering on Wednesday appointed Mirae Asset Securities, KB Securities, and Goldman Sachs to lead its IPO but did not decide who would be the main bookrunner, according to investment bank industry sources on Thursday. Additional underwriters are expected to join the syndicate as Hyundai Engineering’s market cap is estimated at around 6 trillion won to 7 trillion won, according to sources.

With the decision on lead IPO underwriters made, the company is expected to go public within this year although it has not officially announced the exact date.

If Hyundai Engineering goes public this year, it would be the first IPO of a Hyundai Motor Group family member in two years. The group’s most recent IPO was Hyundai Autoever, an in-house IT unit, in March 2019.

Hyundai Engineering is an engineering service company specializing in construction of oil and gas plants including refineries and LNG facilities. Its major shareholder is Hyundai Engineering and Construction with a controlling stake of 38.6 percent. Other key shareholders include Hyundai Motor Group's chairman Chung Euisun (11.7 percent), Hyundai Glovis (11.6 percent), Kia Motors (9.3 percent), and Hyundai Mobis (9.3 percent).

Market analysts expect the company’s IPO would include some existing shares held by current shareholders on top of new issues as the company is seeking for IPO to find new growth engines and to reform governance structure.

Hyundai Engineering earned a consolidated operating profit of 258.7 billion won last year over sales of 7.2 trillion won. Sales grew 5.3 percent on year but operating profit fell 36.6 percent. Net profit also contracted from 298.5 billion won to 173.9 billion won over the same period.

The company said business conditions at its overseas units have begun to normalize from Covid-19 fallouts that weighed on profit last year.

Analysts estimate the company’s value at minimum 6 trillion won, but its market value will likely be determined by its first-half results.

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