Korea Development Bank (KDB) has begun the process of selling management rights to HMM, an oceangoing Korean shipping company. It is seven years since the state-run bank took over the management rights to the company in a liquidity crisis from Hyundai Group in 2016.
KDB announced on March 2 that it will form an advisory group related to the sale of HMM’s management rights in collaboration with Korea Ocean Business Corporation. The bank plans to set up an advisory group by selecting one company each in the three sectors of sales, accounting and legal affairs.
KDB will receive proposals by March 20 and complete the formation of the advisory group on March 22, according to a plan for the formation of the advisory group on the sale of HMM, which was posted on a government website on March 2. “Once the advisory group is formed, we will discuss overall strategies and then set a practical schedule for the sale of HMM through consultations with related organizations,” a KDB official said.
HMM originated from Asia Merchant Marine founded by Hyundai Group in 1976 when ships built by Hyundai Heavy Industries were not delivered due to the Oil Shock in the 1970s. After changing its name to Hyundai Merchant Marine in 1983, it was nearly the only one to enjoy a boom during the foreign exchange crisis in the 1990s, earning much-needed foreign currencies at that time.
Hyundai Merchant Marine became an affiliate of Hyundai Group led by Chairman Chung Mong-hun as Hyundai Group was split into Hyundai Group, Hyundai Motor Group and Hyundai Heavy Industries Group in 2000. The shipping company went through ups and downs including restructurings while passing through a “long tunnel of loss” due to the global financial crisis in 2008 and a slump in the shipping market. In the end, in 2016, it was separated from Hyundai Group due to a capital reduction and a change of the credit group’s debts into investments, and KDB and Korea Ocean Business Corporation became its major shareholders. The following year, in 2017, Hanjin Shipping went under in the process of restructuring the Korean shipping industry, making Hyundai Merchant Marine, the number one shipping company in Korea.
In 2020, when its name was changed to HMM, fares soared due to the COVID-19 crisis, pushing up its operating profit to 980.8 billion won, making HMM turn profit in 10 years. In 2021 and 2022, it posted operating profits of 7.3 trillion won and 10 trillion won (provisional), respectively.
Potential candidate companies that may take over HMM include LX Pantos, Hyundai Glovis, CJ Logistics, SM Line, and Samsung SDS which is partly engaging in international logistics, many experts say. But none of them have been making any notable moves.