Ship IPO puts wind back in Korea Inc's sails after raising $546 million

A Kkr-backed marine services firm may help South Korea catch up. Thanks to the artificial intelligence craze and geopolitics, equities across Asia are having their moment.

The KOSPI 200, though, has risen just 4 per cent since the start of the year, underperforming benchmark indices in Japan, Taiwan (China), and even Hong Kong (China). Wednesday's successful debut of HD Hyundai Marine Solution, which surged more than 40 per cent in early trading, should buoy sentiment.

Despite boasting global champions in semiconductors, autos and more, South Korea's US$1.8 trillion stock market suffers from an anaemic valuation.

Blame powerful family-controlled conglomerates and weak corporate oversight. Taking a page out of Japan's big push to improve shareholder returns – which has helped lift the Nikkei 225 Index 16 per cent this year – South Korea's stock market watchdog in February unveiled its "Corporate Value-up Programme".

Since then, overseas investors have bought a net $7 billion-worth of stocks, data from Korea Exchange show, helping boost, opens new tab foreign ownership of the KOSPI to roughly 35 per cent as of early April – a threeyear high. That's not bad, but with the Nikkei ascending this year to record levels, South Korea is lagging behind. That's partly self-inflicted. Last year, financial authorities banned short-selling.

At the time, critics accused the government of meddling to please a huge constituency of retail investors ahead of parliamentary elections. The ban is set to expire next month but has probably dampened sentiment, particularly for institutional investors suddenly unable to hedge their positions.

Against this backdrop, a lot was riding on

HD Hyundai Marine Solution's initial public offering – the country's largest float in more than two years.

On paper, there's plenty to like about the company, which specialises in marine services spanning repair, maintenance, and reconstruction. Earnings surged 44 per cent last year to 151.1 billion won ($111 million), thanks to booming demand from ships going green. These eco-friendly vessels require more servicing and parts than conventional ones.

Better yet, the company is part of the HD Hyundai shipbuilding-to-oil refinery conglomerate and counts private equity heavyweight KKR as a major shareholder. Institutional investors bid for 200 times the amount of shares on offer, IFR reported, with allocations "heavily skewed" towards long-only funds.

At the very least, the strong debut should nudge other IPO hopefuls such as online lender K Bank, fintech darling Viva Republica, and Tencent-backed video-games developer Shift Up. South Korea's markets are primed to go full steam ahead.

Shares in South Korea's HD Hyundai Marine Solution opened up almost 44 per cent at 119,900 won on their debut on May 8.

The company, which specialises in marine after-sales and retrofit services including maintenance, repair, and reconstruction, priced its shares at 83,400 won each, the top of the indicative price range.

As part of the deal, the company sold 4.45 million new shares, while its second-largest shareholder KKR sold 4.45 million of its shares. In total, the IPO raised 742 billion won ($546.39 million).

Following the offering, parent HD Hyundai holds a 55.8 per cent stake, and Global Vessel Solutions, which is managed by KKR, holds 24.2 per cent.