Shares of Hyundai Heavy Industries (HHI) made a resounding debut on the Korean Stock Exchange, with the share price rapidly soaring to 125% above the initial public offering (IPO) price.
The company, which is one of the largest shipbuilders in the world, saw its stock price reach nearly $ 115 in the first day of trading, more than double the price of the company’s original offering. about $ 51. Trading eventually settled at a more modest average of around $ 58.
The rise in the share price was attributed to the strong interest of national and institutional investors, who sought to seize part of the company at the start of the session. During a presale period that ended last week, HHI said it raised around $ 935 million in a heavily oversubscribed IPO.
A total of 1,633 domestic and foreign institutional investors made offers to buy its shares during the IPO. The winners got a combined turnout of around 20 percent.
“We would like to thank all the institutional investors who appreciated both our capacity and our growth potential. We are confident that our company will ensure global competitiveness by opening a new chapter with the IPO, ”Han Young-seuk, CEO of HHI, said in a statement last week.
The company has announced its intention to use the proceeds of the IPO to develop environmentally friendly vessels, research vessel automation and build advanced production facilities to enhance its competitiveness.
HHI is 100% owned by Korea Shipbuilding & Offshore Engineering (KSOE), the intermediary holding company for HHI Group’s shipbuilding operations. KSOE was formed in 2019 as part of HHI Group’s offer to acquire Daewoo Shipbuilding & Marine Engineering, a $ 1.8 billion deal that is still awaiting regulatory approval.
Strong debut on the Korean Stock Exchange allows HHI to become the second-largest listed shipbuilder with a market capitalization of $ 4.5 billion. KSOE, which is already listed, has a market value of $ 7.4 billion.
The IPO comes as HHI sees an increase in orders for new builds, driven in part by growing demand for boxships. In the seven-month period to July, it increased its order backlog by $ 8.6 billion.
Clarksons predicts that new orders are expected to increase by 21% globally this year, reaching 974 vessels and a total of 23.8 million gross tonnes cleared. From 2022 to 2025, new world orders should reach 35.1 million CGT, or 1,552 ships, on an annual average.
Top image: Hyundai Heavy Industries cranes and shipyard (SarahTz / CC BY-SA 2.0)