K Shipbuilding up for sale as Korean shipyards ride new boom

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 its 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 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 medium-range tanker segment – a core market for Korea's mid-tier shipyards.

The divestiture comes as South Korean shipbuilders enter a supercycle, benefiting from a retreat by Chinese rivals amid escalating tensions between Beijing and Washington.

K Shipbuilding has turned to the black after 14 years of losses. In 2024, it posted an operating profit of 11.2 billion won, compared to a 59.6 billion won shortfall the year prior.
 
Its enterprise value is estimated at between 700 billion won and 1 trillion won, or roughly 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 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 an underperformer, it has staged a remarkable turnaround. 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, the first time to surpass the 1 trillion won mark since 2019.

Its seller is shunning foreign private equity bidders as they see the shipbuilder 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 the chemical, steel and logistics sectors through a series of M&As.


DAEHAN SHIPBUILDING SEEKS JULY LISTING


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 was in a debt rescheduling program from 2009 to 2022.

Write to Jong-Kwan Park at pjk@hankyung.com
 

Yeonhee Kim edited this article.