HMM Owners Hyundai Merchant Marine Start Privatization Process HMM’s two largest shareholders, the Korea Development Bank (KDB) and Korea Ocean Business Corporation (KOBC), have announced that they will form an advisory group to sell the stake of the government on the container ship.
The companies, which collectively own 40.6% of the Korean line, are currently receiving proposals from M&A advisory firms and intend to appoint a sales manager, an accounting firm and a law firm by the end of March.
HMM has been controlled by the Korean state since 2016, when the government and its entities stepped in to rescue the company from a liquidity crisis. Since then, the company has re-established itself with the help of pandemic profits and recently posted a record net income of KRW 10.06 trillion (USD 8.2 billion) by 2022.
Container operations contributed to an operating profit of KRW 9.86 trn However, despite regular talk of privatization since 2021, the company will now enter sale negotiations at a time of falling freight rates and the increase in the supply of boats.
There is also the issue of convertible bonds held by state institutions, which mature this year. If converted to shares, this would boost the government’s stake to 74% and increase the price of any sale. HMM’s market capitalization stood at KRW 10.98 trn as of today’s market close on the Korea Stock Exchange, which could imply a value in the region of KRW 4.5 trn for the 40.6% held from KDB and KOBC. The company is currently the eighth largest airline in the world with a fleet of around 815,000 TEU.