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The sale of Hyundai LNG Shipping is expected to close as early as the third quarter of this year, with only a government foreign investment security review remaining.
According to investment banking industry sources and government officials, the Ministry of Trade, Industry and Energy's Foreign Investment Committee is gathering opinions from relevant ministries on the deal. If the committee determines that a security review is warranted, the case will first go through a preliminary examination by a specialist subcommittee before the full committee conducts its review. The process may result in conditions being attached to the deal, such as a partial business divestiture or confidentiality requirements.
Under the Foreign Investment Promotion Act, the Ministry of Trade, Industry and Energy may conduct a Foreign Investment Committee security review in three circumstances: when a foreign investor files a report, when the minister of a competent authority or the director of the National Intelligence Service requests a review on national security grounds, or when the minister of trade, industry and energy deems one necessary.
The Korea Fair Trade Commission completed its merger review earlier this year, and the Ministry of Trade, Industry and Energy's Industrial Technology Protection Committee recently notified the parties of its findings. The panel examined whether technologies related to Hyundai LNG Shipping's vessels qualify as nationally core technologies. Exempting the deal from a Foreign Investment Committee security review following the industrial technology panel's deliberation — as permitted under the Industrial Technology Protection Act — was considered, but officials decided to proceed with a broader security review. The need was underscored by heightened global geopolitical tensions earlier this year, including the US-Iran war.
Once the Foreign Investment Committee completes its review, the sale process will in effect enter its final stage. Industry watchers expect the security review to conclude sometime in August, making a third-quarter closing possible.
Hyundai LNG Shipping was established in 2014 when Hyundai Merchant Marine — now HMM — spun off its LNG business unit during a restructuring. IMM Private Equity and IMM Investment acquired the company at the time for about 500 billion won ($335 million), with the enterprise value, including debt, assessed at approximately 1.03 trillion won. The company has since secured stable cash flow through a long-term shipping contract with Korea Gas Corporation while diversifying its revenue base into global markets and expanding long-term contracts to boost its enterprise value.
Hyundai LNG Shipping posted consolidated sales of 436.2 billion won and operating profit of 115.7 billion won last year. Its current enterprise value, including debt, is estimated at approximately 3.8 trillion won.
The sale process has not been without setbacks, partly due to shifts in the domestic shipping market. Negotiations with former parent HMM in 2023 fell through over a price gap, and in November last year the company signed a share purchase agreement with Indonesia's Sinar Mas Group, which will invest about 400 billion won to acquire Hyundai LNG Shipping. Sinar Mas Group is an Indonesian conglomerate that has been steadily expanding its footprint in South Korea, having acquired a string of domestic companies including MSS Holdings — the largest shareholder of Monalisa, held by Morgan Stanley Private Equity — and Hosan Tech.
park.jiyeong@heraldcorp.com
