Hahn & Company, a domestic private equity fund (PEF) manager, said on the 13th it will push a fleet reshuffle worth trillions of won between its portfolio shipping companies SK Shipping and H-LINE Shipping.
According to the company, SK Shipping will focus on gas carriers such as liquefied natural gas (LNG) and liquefied petroleum gas (LPG), while H-LINE Shipping will add tankers to its dry bulk and car carrier businesses. SK Shipping will receive 16 LNG carriers from H-LINE Shipping, and H-LINE Shipping will receive 12 tankers and about $300 million (about 424.6 billion won) in cash.
When the transaction is completed, SK Shipping's asset size will be about 11 trillion won and H-LINE Shipping's will be about 5 trillion won.
With this reshuffle, SK Shipping will operate 32 LNG carriers. According to Hahn & Company, by number of vessels it will be the largest in Asia and about third globally. Including its existing 14 LPG carriers, it will focus its capabilities on the gas carrier business and plans to change its name to "K-LNG."
Hahn & Company expects LNG transport demand to increase in the mid to long term due to rising power demand from artificial intelligence (AI) data center expansion and the global energy transition.
H-LLINE Shipping plans to broaden its revenue base by securing tankers under long-term transport contracts with shippers at home and abroad in exchange for handing over LNG carriers.
The plan is to expand its business scope into a shipping company that covers crude oil and raw material transport by adding a tanker portfolio to its existing dry bulk and car carrier businesses.
Hahn & Company acquired Hanjin Shipping's dedicated cargo division in 2014 to establish H-LINE Shipping, merged it with Hyundai Merchant Marine's (HMM) bulk carrier division in 2016, and acquired management control of SK Shipping in 2018. Since the acquisitions, it has restructured the two companies' business models to focus on long-term transport contracts rather than short-term transport that is sensitive to freight rate fluctuations.
H-LINE Shipping's operating profit rose from 127.3 billion won in 2015, right after its establishment, to 369.4 billion won last year. Over the same period, earnings before interest, taxes, depreciation and amortization (EBITDA) increased from 189.5 billion won to 753.8 billion won.
SK Shipping's operating profit also climbed from 73.3 billion won in 2018, when Hahn & Company acquired it, to 504 billion won last year. Over the same period, EBITDA increased from 231.7 billion won to 781.1 billion won.