POSCO, the country’s largest steelmaker, is planning to list its energy production division POSCO Energy on the stock exchange by the end of the year, sources said Thursday.
If realized, the initial public offering of the country’s largest private energy producer is expected to raise more than 1 trillion won ($960 million), and is expected to help its parent company reinforce its financial soundness, analysts said.
POSCO Energy on Friday confirmed the IPO plans but insisted that it would take more time than the sources had suggested.
“POSCO Energy is definitely going public in the future,” Sohn Chang-ho, a company spokesman, told The Korea Herald. “But the end of 2014 is too soon. Insiders have been considering somewhere before 2020, which will be more appropriate to scale the company value and attractiveness in the market,” he said.
However, industry insiders claim that POSCO has started searching for an investment bank to manage the IPO.
The much anticipated IPO plan resurfaced after POSCO chairman Kwon Oh-joon took office on March 14. Kwon said his company would shut businesses that were not globally competitive, and instead focus on developing materials such as lithium and nickel for future high-tech industries and clean energy.
POSCO Energy posted 2.9 trillion won in sales and 226 billion won operating profit in 2013. But it still has 2.6 trillion won worth of debt.
“An IPO could be a good breakthrough,” a stock analyst said.
The company is 77.58 percent owned by POSCO, 14.3 percent by Skylake Incuvest and the rest by smaller private equity funds. The Skylake in December last year sought to divest its share, valued at about 300 billion won, through Credit Suisse.
POSCO Energy has assets in coal-fired power plants, fuel cells and LNG combined cycle power plants. It started out as Kyung-in Energy Company in 1972, was acquired by POSCO in 2005 and changed its name to POSCO Energy in 2012.
By Bae Ji-sook (firstname.lastname@example.org)