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Foreign Sale of Hyundai LNG Shipping Opposed by Korean Industry

HLS Diamond is one of three new gas carriers delivered to the company in March 2023 (Hyundai LNG Shipping)

The proposed sale of South Korea’s leading LNG carrier, Hyundai LNG Shipping, by its current institutional investors is facing hurdles as it is opposed both by the shipping industry and possibly the government. A report in The Korea Times says that the shipping industry sent a letter to the government calling for a block on a potential sale of the company to foreign interests.

Hyundai LNG Shipping has been working to consolidate its position as a leading specialized liquefied gas carrier raising concerns among the shipping industry over potential foreign control. According to the report in the newspaper, concerns are being raised both over the impact on Korea’s energy security as well as risks to Korea’s leadership position in the shipbuilding of gas carriers.

The company is owned by a private equity firm based in Korea, IMM Holdings, a firm with investments in 16 companies and assets valued at $6.4 billion. They stepped in during the financial crisis at Hyundai Merchant Marine in 2014 acquiring the gas carrier business which at the time was operating under long-term contracts with the Korea Gas Corporation (KOGAS). With IMM’s investment, the company has expanded its operations.

Hyundai LNG Shipping currently operates a fleet of 16 LNG carriers as well as six LPG carriers. They are building additional vessels to service expanded business relationships with Petronas. Earlier in 2023, they took delivery of three 86,000 CBM very large gas carriers built by Hyundai Samho Heavy Industries and are scheduled to introduce an advanced 91,000 CBM gas carrier equipped with dual fuel engines. The company is expanding its capabilities to LPG transportation and in January 2023, won the bid to operate an LNG bunkering vessel for Korea LNG Bunkering (KOLB).

IMM previously said it had narrowed the bidding from more than 20 companies to five international buyers ranging between the U.S., the U.K., Greece, and Denmark. The investment group is reportedly expecting to receive between $460 million and $550 million for the company.

The Ministry of Oceans and Fisheries is reported to be considering moving to block the foreign sale of Hyundai LNG Shipping. This comes after reports that the Korea Development Bank and the Korea Ocean Business Corp., currently the controlling investors in HMM, proposed recombining the two shipping companies in late 2022. The deal however fell apart possibly over the price for the gas carrier business.

IMM has said it was open to having a Korean buyer for the business but so far none have made a reasonable financial offer. 

The shipping companies reportedly are also citing the potential for broader impact on the industry noting that Hain, another Korean investment company, has announced plans to sell its control of SK Shipping, another South Korean petroleum products shipping company.

The owners of HMM, which also has energy shipping in addition to its container business, are also pursuing the privatization of the shipping company after years of government investment. The government-controlled banks recently appointed a team of financial advisers to guide the process for the sale of their holdings in HMM.

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