Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
POSCO gets W1.24 tril. from Saudi fund
POSCO Chairman Kwon Oh-joon, left, with Abdulrahman Al Mofadhi, center, secretary general of the Public Investment Fund of Saudi Arabia, after signing an agreement to sell a 38 percent stake in POSCO Engineering and Construction (E&C) to the Saudi sovereign fund for 1.24 trillion won, at the POSCO E&C headquarters in Songdo, Incheon, on June 15. POSCO E&C CEO Hwang Tae-hyun was also present at the signing ceremony. / Courtesy of POSCO
By Lee Hyo-sik
By Lee Hyo-sik
POSCO has received 1.24 trillion won ($1.05 billion) from the Saudi sovereign fund for a 38 percent stake in POSCO Engineering and Construction (E&C), securing much-needed cash to improve its financial health.
The world’s fourth-largest steelmaker said Thursday that the Public Investment Fund (PIF) of Saudi Arabia made the payment, sealing the deal 13 months after both sides signed a sales agreement. POSCO now holds a 52.8 percent stake in one of Korea’s largest construction firms, followed by PIF’s 38 percent. The remaining 9.2 percent is held by other institutional investors.
POSCO pushed for the sale of the stake in the construction unit as part of restructuring efforts under company CEO Kwon Oh-joon to improve its financial state. Saudi Arabia has also been seeking to acquire advanced construction know-how and expertise from POSCO E&C in preparation for the post-oil era.
POSCO officials also say the stake sale will help improve the steelmaker’s international credit ratings, and provide its building arm with more opportunities to take part in industrial and social infrastructure development projects in the Middle Eastern nation.
“PIF will dispatch two members of board of directors to POSCO E&C, which will greatly boost the management transparency and governance structure of the unlisted builder,” a POSCO spokesman said. “The builder will be in a better position to expand its foothold in the Middle East.”
POSCO E&C plans to establish a joint construction firm with the Saudi fund soon. “POSCO E&C Saudi Arabia” will play a key role in the development of hotel, railway and other social infrastructure in the country, according to the spokesman.
“The stake sale will help boost our financial standing, as well as offer more chances for POSCO E&C to secure construction orders from Saudi Arabia,” he said. “The builder will create a win-win partnership with the Middle East nation by sharing its advanced knowledge and know-how.”