Hyundai Engineering headquarters in Seoul is seen in this file photo. Courtesy of Hyundai Engineering

By Park Jae-hyuk

Hyundai Engineering failed to attract institutional investors in a two-day demand forecasting session earlier this week eventually cancelling its listing on the benchmark KOSPI market, putting a brake on Hyundai Motor Group Chairman Chung Euisun's plan to obtain up to 400 billion won ($332 million) in cash through the initial public offering (IPO).


"Considering the market conditions which made it difficult for our company to be evaluated properly, we retracted the IPO, cancelling the remaining procedures with the consent of underwriters," Hyundai Engineering said in its regulatory filing, Friday, the day when it was initially supposed to fix the IPO price.

The decision has been mainly attributed to the recent stock market crash and the worsening investor sentiment about the nation's construction industry in the wake of a recent collapse at an apartment complex construction site in Gwangju, which was under HDC Hyundai Development Company's supervision.

The possibility of the Hyundai Motor Group chairman using the Hyundai Engineering IPO for his managerial succession has also been mentioned as another reason for skepticism among investors, who were concerned about a potential fall in the builder's stock price immediately after it goes public.

The chairman, who holds an 11.7 percent stake in Hyundai Engineering, planned to sell 5.34 million shares, which could have been worth up to 400 billion won, if Hyundai Engineering had gone public and its IPO price had been set at the top end of the range.

Some market insiders expected him to use the money to acquire an additional stake in Hyundai Mobis, which has served as the group's holding company, or pay taxes on the company's shares that he will inherit from his father.

Since it has been unclear when Hyundai Engineering will resume its attempts to go public, the chairman has been forced to wait for a while or consider another option for his succession plan.

"We have yet to decide whether or not to resume the IPO process," a Hyundai Engineering spokesman said.

Even if the company resumes the process, it will not be able to go public until it discloses its fourth quarter for 2021 earnings in late March, because it can only raise money from institutional investors overseas within 135 days from the time the financial statements included in the IPO prospectus are prepared.