K Shipbuilding Co., a mid-tier South Korean shipbuilder, will be put on the market this month after a strong turnaround. The deal, estimated at 1 trillion won ($732 million), is expected to deliver a windfall for investors four years after their acquisition.
A consortium between Seoul-based KHI Investment and UAMCO, a domestic bad bank, has recently sent requests for proposal to major accounting firms to select a lead manager for the sale this month, according to industry sources on Tuesday.
They are offering a 99.58% stake in the shipbuilder, including a 49.79% owned by KHI, an investment firm specializing in small and medium-sized M&As.
The KHI-led consortium acquired a 95% stake in K Shipbuilding, formerly STX Offshore & Shipbuilding Co., for 250 billion won in 2022.
At the time, the company was struggling with fierce competition from Chinese rivals, which undercut domestic shipbuilders in the small- and medim-range tanker segment — a core market for Korea’s mid-tier shipyards.
The divestiture comes as South Korean shipbuilders enter a supercycle, benefting from the retreat by Chinese rivals amid escalating tensions between Beijing and Washington.
K Shipbuilding turned to the black after 14 years of losses. In 2024, it posted a 11.2 billion won operating profit versus a 59.6 billion won shortfall the year prior.
Its enterprise value is estimated at between 700 billion won and 1 trillion won, or rougly two to 2.5 times its book value.
The multiple is lower than the price-to-book ratio of 4.58 applied to its peer Daehan Shipbuilding Co., which is also owned by KHI Investment.
Daehan is seeking to go public on the Korea Exchange this month.
Along with the stake sale, UAMCO, a non-performing loan investor operated by leading Korean banks, also wants to recover 150 billion won in debts extended to K Shipbuilding through debt refinancing, said the sources.
REMARKABLE TURAROUND
K Shipbuilding had once ranked among South Korea’s top four shipbuilders before entering a debt workout in 2013 in the aftermath of the 2008 global financial crisis. In 2016, it was placed under court receivership.
Once considered a underperformer, it staged a remarkable turaround. Its order backlog now covers two years worth of work, with its shipyard operating at an average utilization rate of 110%.
In the second quarter, the company’s operating profit skyrocketed 405% on-year to 12.7 billion won, with revenue up 22.7% to 285.6 billion won.
For all of 2025, its revenue is forecast to exceed 1 trillion won, marking its first time surpassing the 1 trillion won mark since 2019.
Its seller is shunning foreign private equity bidders as they view it as a strategic asset for Asia’s No. 4 economy, according to the sources.
They will weigh not only the bid price, but also the prospective buyer’s management capability.
Bankers cite South Korea’s KG Group as a likely buyer. Founded in 2003, the group has expanded into chemical, steel and logistics sectors through a series of M&As.
DAEHAN SHIPBUILDING SEEKS TO GO PUBLIC IN JULY
Meanwhile, Daehan Shipbuilding is seeking to raise up to 500 billion won through an initial public offering this month.
Its valuation of up to 1.93 trillion won is based on the average PBR of 4.58 for South Korea’s top four shipbuilders, including HD Hyundai Heavy Industries Co. and Hanwha Ocean Co.
In 2022, KHI acquired Daehan Shipbuilding for 200 billion in a consortium with two other homegrown private equity firms, which have already exited. Daehan had been in a debt rescheduling program from 2009 to 2022.
By Jong-Kwan Park
pjk@hankyung.com
Yeonhee Kim edited this article.
