South Korean shipbuilders and ocean freight companies will look to raise billions of dollars via stock quotes in the second half of 2021, as industries benefit from a rebound in global trade after the Covid-19 pandemic.
Shipbuilder Hyundai Heavy Industries and ocean freight groups H-Line Shipping and SM Line are forecasting initial public offerings worth a total of $ 3.3 billion, according to investment bankers familiar with the deals, as the companies are betting on a multi-year supercycle potential for commerce. related sectors after a decade of stagnation.
“Investor sentiment about the sector is improving rapidly as the industry enters a bullish cycle,” said a South Korean investment banker familiar with the situation. “We anticipate strong demand for 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 expected to raise $ 1.1 billion to $ 1.5 billion during an IPO in Seoul in mid-August, the investment banker said. Proceeds will be spent on the development of environmentally friendly vessels and the expansion of low carbon production facilities to meet stricter environmental regulations.
Global shipyards and shipping groups are having their best year in more than a decade thanks to a faster-than-expected recovery in world trade, with growing demand driving a jump in shipbuilding orders and freight rates.
Global ship orders doubled in the first quarter from a year earlier, to 10.2m compensated gross tonnage, a measure of the labor required to build a ship, according to industrial tracker Clarksons Research. Korean shipbuilders have won more than half of these orders.
Clarksons predicted that global orders will increase by nearly 50% this year to CGT 31.5 million and reach an annual average of CGT 35.6 million between 2022 and 2025. Hyundai Heavy has won orders for 42 ships from worth $ 5.9 billion this year, more than the $ 3.5 billion it secured over all of 2020.
H-Line Shipping, the country’s second-largest bulk carrier, is expected to raise between $ 800 billion and $ 1 billion during an IPO in November. SM Shipping, a mid-size container shipping company, is expected to raise $ 540 million to $ 809 million in September or October.
Shares of Hyundai Merchant Marine, Korea’s largest shipping group, have more than tripled this year, boosted by congestion at major ports and the Suez Canal disruption in March.
Hyundai Heavy’s planned IPO, however, was clouded by investor concerns about death of workers. About 50 of them have died from accidents and illnesses in the past 10 years, 76 percent of whom are contractors, according to the company’s union. The Labor Ministry suspended operations at part of the company’s Ulsan shipyard last month, after two workers died this year.
Trade secrets
The FT has revamped Trade Secrets, its go-to daily briefing on the changing face of international trade and globalization.
register here to understand which countries, companies and technologies are shaping the new global economy.
Hyundai’s union staged a partial strike last month, demanding higher wages and measures to prevent workplace accidents. The company announced a plan to invest 300 billion won ($ 269 million) in three-year security measures last year.
“We will do our utmost to avoid the unfortunate situation where [workers] lose their precious life in our workplace ensuring that the principle of safety first takes hold, ”said Han Young-seuk, President of Hyundai Heavy.
Investors are calling for change. “They must keep their promise to improve [environmental, social and governance] standards, ”said Park Yoo-kyung, advisor at APG, a Dutch pension fund. “As long as worker deaths continue, we cannot invest in this business.”
