Korean carriers will raise billions of dollars as they bounce back from world trade

South Korean shipbuilders and shipping companies will try to raise billions of dollars through stock quotes in the second half of 2021 as industries enjoy a global trade boom following the Covid-19 pandemic.

Shipbuilders Hyundai Heavy Industries and shipping groups H-Line Shipping and SM Line are planning initial public offerings worth up to $ 3.3 billion combined, according to investment bankers who know the deals, as companies they are betting on a potential multi-year supercycle for trade. related sectors after a ten-year fall.

“Investor sentiment in the sector is improving rapidly as the industry is entering an upward cycle,” said a South Korean investment banker close to the situation. “We expect strong demand from IPOs, as growth is expected with higher ship prices and shipping rates.”

Hyundai Heavy Industries, which is part of the world’s second-largest shipbuilder, is likely to raise $ 1 billion to $ 1.5 billion on the Seoul IPO in mid-August, the investment banker said. The profits will go to the development of green ships and the expansion of production facilities with low carbon stricter environmental regulations.

World shipyards and maritime groups are having their best year in more than a decade thanks to a faster-than-expected recovery in world trade, with growing demand leading to a jump in shipbuilding orders and transportation rates.

According to industry tracker Clarksons Research, ship orders doubled globally during the first quarter from the previous year, to 10.2 million gross offset dead weight, a measure of the work required to build a boat. Korean shipbuilders won more than half of those commissions.

Clarksons has forecast that world orders will jump nearly 50% this year to 31.5 million CGT and reach an annual average of 35.6 million CGT between 2022 and 2025. Hyundai Heavy has won orders for 42 vessels worth of $ 5.9 billion this year, more than the $ 3.5 billion guaranteed throughout 2020.

H-Line Shipping, the country’s second-largest bulk carrier, is expected to raise between $ 800 million and $ 1 billion from a IPO. SM Shipping, a medium-sized container shipping company, is likely to raise $ 540 million and $ 809 million between September and October.

Shares of Hyundai Merchant Marine, Korea’s largest shipping group, have tripled this year, driven by congestion in major ports and Interruption of the Suez Canal In March.

However, the planned IPO of Hyundai Heavy has been clouded by investor concerns worker deaths. About 50 have died after accidents and illnesses in the past ten years, and 76% of them are subcontractors, according to the company’s union. The Ministry of Labor last month suspended operations in part of the company’s Ulsan shipyard, after two worker deaths this year.

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Hyundai’s labor union held a partial strike last month demanding a pay rise and measures to prevent industrial accidents. The company last year announced a plan to invest $ 300 billion ($ 269 million) in security measures over three years.

“We will make every effort to avoid the unfortunate situation where [workers] we lose their precious lives in our workplace by making sure that the principle of safety first is upheld, ”said Han Young-seuk, President of Hyundai Heavy.

Investors are calling for changes. “They must keep their promise to improve [environmental, social and governance] standards, “said Park Yoo-kyung, an adviser to APG, a Dutch pension fund.” As long as workers’ deaths continue, we cannot invest in this company. “