Hyundai Oilbank drops IPO plans amid stock market doldrums

Hyundai Oilbank's corporate logo / Yonhap

By Lee Min-hyung

Hyundai Oilbank has dropped its plan to go public in the latter half of this year, as the company is unlikely to receive a proper valuation from the market amid the ongoing stock market slump here.

“We decided to withdraw our planned initial public offering (IPO) at a time when we are facing tough market circumstances, which means we cannot be properly valued despite our solid earnings performance,” an official from the company said.

This is the third time that the refiner dropped its planned IPO. The company gave up its listing plans previously in 2012 and 2018, citing worsening external market conditions at the time. Hyundai Oilbank's value was estimated around 10 trillion won ($7.6 billion) after the IPO.

The company is one of the most-anticipated firms to hit the local IPO market this year. It chalked up a record operating profit of 1.14 trillion won in 2021 and attained annual sales of 20.6 trillion won. The Hyundai affiliate went on a winning streak in the first quarter of 2022 with a solid operating profit of 704.5 billion won.

This situation raised hopes for a successful IPO, but stock market sentiment started to freeze in the second quarter of this year, shortly after the U.S. Federal Reserve hiked its key interest rate in March.

The benchmark KOSPI soared to 3,300 points in June last year, but the main bourse fell to around 2,300 in July 2022. This tumble pushed more companies to delay their IPO plans for similar reasons as the Hyundai subsidiary.

Early this year, Hyundai Engineering also canceled its IPO plans due to the stock market doldrums.

The industry expects more companies to remain cautious until the stock market regains recovery momentum, which will possibly come as early as the end of this year when the Fed and the Bank of Korea are forecast to end their monetary tightening.