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피터빈트

POSCO secures W1.24tr investment from Saudi fund

By KH디지털2

Published : June 15, 2015 - 15:40

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POSCO, South Korea’s top steelmaker, secured a 1.24 trillion won ($1.08 billion) overseas investment Monday by selling stakes in its construction unit to Saudi Arabia’s sovereign wealth fund.

POSCO chairman Kwon Oh-joon inked the deal with the Gulf state’s Public Investment Fund secretary-general Abdulrahman al Mofadhi, selling a 38 percent share in POSCO Engineering and Construction for 1.2 trillion won, according to the company.

POSCO added that it would also collaborate with PIF to establish a Saudi government-run construction firm. The joint venture will build major railroads, hotels and buildings ordered by Saudi Arabia. The company declined to comment on when the joint venture would be established.

“This occasion, on which Korea and Saudi Arabia opened the future together, was possible due to bilateral exchanges that have lasted more than 1,000 years,” Kwon said during the event held at the main office of POSCO E&C in Songdo, Incheon.

The development comes amid the firm’s struggles to shrug off recent controversies involving its executives allegedly creating slush funds and its clash with Daewoo International over the trading arm-owned gas field in Myanmar.

POSCO chairman Kwon Oh-joon (left), Public Investment Fund secretary-general Abdulrahman Al Mofadhi (center) and POSCO E&C president Hwang Tae-hyun pose after signing a 1.24 trillion won investment deal in Songdo, Incheon, Monday. (POSCO) POSCO chairman Kwon Oh-joon (left), Public Investment Fund secretary-general Abdulrahman Al Mofadhi (center) and POSCO E&C president Hwang Tae-hyun pose after signing a 1.24 trillion won investment deal in Songdo, Incheon, Monday. (POSCO)

The Saudi state-backed investor initially offered the deal in August, as its country seeks to invest a record amount in public infrastructure projects, such as airports and roads, to stimulate the economy and cut energy dependency.

POSCO and PIF signed a memorandum of understanding backed by the South Korean government during President Park Geun-hye’s visit to the Middle East in March.

Analysts had mixed views on the matter, with some saying it would help streamline the firm’s affiliates while others voiced concerns over the construction unit’s long-term finances.

By Suk Gee-hyun (monicasuk@heraldcorp.com)

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