Hyundai LNG Shipping expects to draw new capital from PEF, adding appeal to M&A

Hyundai LNG Shipping Co. expects to draw new capital of 100 billion won ($84.2 million) from a local private equity firm, adding appeal to the planned sale of South Korea’s largest LNG carrier.

According to multiple sources from the investment bank industry on Sunday, Daishin Private Equity is in talks with Hyundai LNG Shipping’s biggest shareholder IMM Private Equity to invest 100 billion won in the company. The investment, if realized, will allow Daishin Private Equity to own 10 to 20 percent stake in Hyundai LNG Shipping.

The private equity firm plans to raise the funding from a co-investment fund created jointly with National Pension Service four years ago.

The LNG carrier which has been responsible for delivering natural gas shipments to the country for state utility Korea Gas Corp. since 1994 under HMM, formerly Hyundai Merchant Marine before it was nationalized, was sold off to an IMM consortium in 2014.

Hyundai LNG Shipping transported 5.23 million tons or 13 percent of 40 million tons of LNG imports last year.

The company is currently fully owned by a consortium of IMM Private Equity and its affiliate IMM Investment.

Under the private equity, the carrier’s sales increased from 113.2 billion won in 2014 to 187.4 billion won last year.

The IMM consortium has put the company up for sale to fetch around 1.5 trillion to 2 trillion won. The sale process may lengthen as the PEF wishes not to rush with the sale if price terms are not met.

Four to five candidates including KG Group and KKR submitted preliminary bids in of August. KG Group is looking to enter logistics and shipping businesses. KKR is exploring new business opportunities after buying SK E&S redeemable convertible preferred stock for 2.4 trillion won.

SK E&S is Korea’s biggest private supplier and can create synergy with Hyundai LNG Shipping.

HMM could also go after the former unit.