[IPO Spotlight] Hyundai Oil, Prolonged Preliminary Review... Shareholders' Agreement 'Obstacle'

[Asia Economy Reporter Park So-yeon] The preliminary review for the initial public offering (IPO) of Hyundai Oilbank, which is attempting its third IPO, is experiencing delays. Although it usually takes about two months from application to approval, the shareholder agreement with the second-largest shareholder is causing obstacles.

According to the investment banking (IB) industry on the 3rd, Hyundai Oilbank applied for the preliminary review at the end of last year under the management of NH Investment & Securities but has yet to receive the results.

The typical preliminary review period is 45 business days. However, the Korea Exchange has raised issues with certain clauses in the shareholder agreement with Aramco, such as 'access to financial statements' and 'written consent required for investments above a certain amount,' which appears to be causing some delay in the review results.

An IB industry insider said, "There has been a question whether the shareholder agreement with Aramco violates the principle of shareholder equality," adding, "We are examining whether it exercises excessive power that unduly restricts routine management activities compared to the shareholding ratio."

The principle of shareholder equality means that shareholders should be treated equally in terms of their legal relationships (rights and obligations) based on the number of shares they hold.

Recently, during the preliminary review process of Hyundai Engineering, which withdrew its listing plan, this principle of shareholder equality became a major issue, leading the Korea Exchange to scrutinize such matters meticulously as a kind of guideline during the review process.

This is Hyundai Oilbank's third attempt at an IPO. The first attempt was in 2011, but the plan was abandoned due to a sharp drop in international oil prices and a downturn in the industry. The second attempt was in 2017, but it was hindered by strengthened accounting audits by financial authorities following the Samsung Biologics accounting scandal.

If Hyundai Oilbank passes the review this time, it plans to complete the listing within the first half of the year after institutional investor demand forecasting. Hyundai Oilbank's expected market capitalization is in the 10 trillion KRW range. In 2019, it was valued at 8 trillion KRW when it attracted investment from Saudi Aramco.

Hyundai Oilbank cautiously anticipates IPO success based on three major factors: international oil prices, petrochemicals, and the hydrogen business.

Recently, international oil prices have reached their highest point since May 2011 amid escalating geopolitical tensions surrounding Russia and Ukraine. An industry insider said, "Since the surge in international oil prices is a structural issue rather than a temporary phenomenon, there seems to be no reason for prices to plummet before the public offering." Refiners' earnings are linked to international oil prices, and inventory valuation gains increase as prices rise.

Hyundai Oilbank expects operating profits of 500 billion KRW in the petrochemical sector this year through steady investment in petrochemical facilities. By 2030, it plans to reduce the share of refining in its sales to 45% and diversify its portfolio into petrochemicals and hydrogen energy.

The hydrogen business is also a noteworthy factor. Hyundai Oilbank has announced plans to produce 100,000 tons of blue hydrogen by 2025 and has concrete commercialization plans. The company has commercialized technology that captures hydrogen produced as a byproduct during crude oil reforming (a process to manufacture high-grade gasoline) and reacts the resulting carbon with calcium to produce calcium carbonate, which is used as aggregate.

An IB industry official said, "They have succeeded in commercializing technology to produce aggregate from calcium carbonate," adding, "I believe Hyundai Oilbank is a unique company with strong competitiveness in the hydrogen economy, possessing everything from hydrogen production to a supply network using gas stations."

This content was produced with the assistance of AI translation services.