This article was displayed on the ChosunBiz MoneyMove (MM) site on Feb. 13, 2025, at 10:34 a.m.
HD Hyundai has begun a search to acquire assets valued in the trillions. It is reported that the company believes this is an opportune time to acquire undervalued corporations, as its major affiliates are posting good results and cash is piling up.
According to the investment banking (IB) industry on the 13th, HD Hyundai is said to have started a full-fledged market survey to purchase corporations with valuations in the trillions. Some in the industry speculate that HD Hyundai is likely to revive HYUNDAI HYMS, which it sold to the private equity fund operator J&PE, but it is also reported that the company is strongly willing to acquire even larger assets.
Industry insiders say that HMM is among the assets HD Hyundai is interested in. There are reports that they have been in contact behind the scenes with organizations such as the Korea Development Bank (KDB), which holds management rights in HMM. However, HD Hyundai officially denies this.
An official in the IB industry noted that "in the case of HMM, the valuation has grown too large so there aren't many suitable acquisition candidates, but there have been many inquiries about a resell recently." HMM is expected to have a combined equity stake of nearly 72% from the Korea Development Bank and Korea Maritime Promotion Corporation when all remaining perpetual bonds are converted into shares in April, in which case the sale price is estimated to reach 10 trillion won.
The market believes that HD Hyundai has sufficient capacity to engage in mergers and acquisitions (M&A) valued in the trillions. A senior official in the IB industry said, "Defense and shipbuilding are doing very well, and the power equipment affiliate HD Hyundai Electric is literally making a fortune."
Last year, HD Hyundai Electric recorded sales of 3.3223 trillion won and operating profits of 669 billion won. The operating profit increased by 20% compared to the previous year. The global boom in artificial intelligence (AI) has significantly increased investments in power infrastructure related to global data centers, leading to increased sales in power equipment. HD Hyundai Electric is a subsidiary of HD Hyundai, holding a 37% equity stake, with current assets totaling 2.36 trillion won as of the end of the third quarter last year.
The shipbuilding and marine affiliates are also "cash cows" for the HD Hyundai group. Last year, HD Korea Shipbuilding & Offshore Engineering recorded sales of 25.5386 trillion won and operating profits of 1.4341 trillion won. The operating profit showed a 408% increase compared to the previous year.
The improvement in HD Korea Shipbuilding & Offshore Engineering's performance is thanks to its subsidiaries. HD Hyundai Heavy Industries recorded sales of 14.4865 trillion won and operating profits of 705.2 billion won, while HD Hyundai Samho reported sales of 7.031 trillion won and operating profits of 723.6 billion won, and HD Hyundai Mipo achieved sales of 4.63 trillion won and operating profits of 88.5 billion won. Last year, HD Hyundai Marine Solution, which was listed on the stock market, recorded sales of 1.7455 trillion won and operating profits of 271.7 billion won, contributing to the group's strong performance.
Additionally, the group's robotics subsidiary HD Hyundai Robotics is in contact with financial investors (FIs) to attract pre-IPO investment, with an expected corporate value of 7 to 8 trillion won. The amount of investment being sought is said to be around 100 billion won. HD Hyundai holds a 90% equity stake in HD Hyundai Robotics.
Meanwhile, an official from HD Hyundai stated, "Due to the fact that we belong to the same Hyundai Group, HMM has been mentioned several times as an acquisition candidate, but there are no plans to consider acquiring HMM at all."