Hanwha Energy is expected to face controversy over dual listing if it proceeds with an initial public offering, industry observers say.
Hanwha Group has 12 listed affiliates, the fifth-largest number among Korean conglomerates. However, unlike typical dual listings where an already-listed parent company takes an unlisted subsidiary public, Hanwha Energy's shares are held by individuals.
Some argue that Hanwha Energy should not be considered a dual listing case, as it is not under the control of a listed company but rather holds a majority stake in Hanwha Corp., the de facto holding company of Hanwha Group, indirectly controlling key affiliates.
According to investment banking sources on Monday, several Korean securities firms serving as lead managers for Hanwha Energy's listing view the dual-listing issue as the biggest variable in the IPO process.
In March this year, Hanwha Energy selected Korea Investment & Securities, NH Investment & Securities and Daishin Securities as lead managers, with KB Securities and Shinhan Investment Corp. as co-managers, beginning IPO preparations. However, the company suspended its IPO push after Hanwha Aerospace's (012450.KS) large-scale rights offering and dual listings by large conglomerates became social controversies.
"Hanwha Energy is a company that could go public at any time, but social controversy blocked the path at that time," an investment banking source said. "The biggest variable in any future IPO push will be public opinion surrounding dual listing."
Hanwha Energy is 100% owned by third-generation family members of the group's founding family. Even if 20% of shares are sold to financial investors, individual ownership would remain overwhelmingly high. Additionally, unlike cases where a listed parent takes an unlisted subsidiary public, Hanwha Energy holds a 22.15% stake in Hanwha Corp., the de facto holding company of Hanwha Group.
Investment banking sources say there is no reason to view Hanwha Energy's IPO as a dual listing, as it would not negatively affect the share price of a listed parent company.
Another variable for the future IPO is expected to be demonstrating corporate growth potential. Hanwha Energy originated from Yeosu Combined Heat and Power Generation, which was spun off from Hanwha Petrochemical (now Hanwha Solutions) as a district energy business. The company operates combined heat and power plant-based district energy businesses at Yeosu National Industrial Complex and Gunsan 2 National Industrial Complex.
The company entered the solar power generation business in 2013 and has successfully expanded into the United States, Europe, Japan and Australia.
"Given its ownership structure, Hanwha Energy's IPO will inevitably involve more sales of existing shares rather than new share issuances," said an IPO division head at a securities firm. "To convince investors of the IPO's justification, the company needs to demonstrate potential for additional business expansion."
