The sale of Hyundai LNG Shipping, which had been delayed due to national energy security concerns, is now moving forward with the final approval from South Korea's Ministry of Trade, Industry and Energy. The ministry has completed its review of foreign investment security and has approved the sale with national security conditions.
Deal Details
The seller, the IMM Investment Consortium, and the buyer, Sinar Mas Group of Indonesia, will continue to finalize the remaining steps of the deal. The transaction is currently on track to be completed by the end of this month. This agreement is valued at 400 billion won (approximately 3.8 trillion won including debt) and involves the sale of 100 percent of the special company Aegis One to Border Resources, a subsidiary of Sinar Mas Group.
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National Security Review
This review focused on the impact of the sale of Hyundai LNG Shipping on national energy security and the supply of liquefied natural gas (LNG). The Ministry of Trade and Industry (MOTI) has examined the opinions of relevant agencies and ministries, taking into account geopolitical risks in the Middle East. The government has concluded that by setting specific conditions related to national security, it can manage these risks.
This sale had previously been reviewed by the Korea Fair Trade Commission and the Industrial Technology Protection Committee of the ministry. However, the closing of the deal was delayed due to holdups in the final stage, namely the review of foreign investment security. The Industrial Technology Protection Committee has examined the risk of technology leakage related to shipbuilding owned by Hyundai LNG Shipping. The Foreign Investment Committee has also taken a broader look at the impact on the energy supply chain.
Economic Implications
Hyundai LNG Shipping, as a key carrier under the South Korean flag, transports Korea's LNG imports under long-term shipping contracts with Korea Gas Corporation (KOGAS). Some have warned that transferring control of this company to a foreign buyer may disrupt the transportation of strategic materials. However, sellers claim that even if control is transferred abroad, obligations under existing long-term shipping contracts will remain intact, limiting the impact on Korea's energy supply.
Sellers initially emphasized transferring control to a domestic company but were unable to finalize a contract. In 2023, they held negotiations with HMM, the former owner of Hyundai LNG Shipping, but the talks failed due to price disputes. After unsuccessful attempts to find a domestic buyer, the sale was extended to foreign buyers, culminating in a contract with Sinar Mas Group signed last November.
While the sale was delayed, the government's review also considered the issue of return on investment for domestic investors such as pension funds. The National Pension Service and Korea Post have invested in the Rose Gold No. 2 fund, which IMM PE has used to purchase Hyundai LNG Shipping. This fund was established in 2012 and is now in its fourteenth year. With further delays, pressure to finalize this deal has increased.
