Hahn Mulls $4 Billion Sale of Korea's H-Line Shipping

(Bloomberg) -- Hahn & Co. is considering options for H-Line Shipping Co. including a partial or full sale of the South Korean freight company, people familiar with the matter said.

The private equity firm is working with financial advisers on the potential transaction, which could value the entire shipping firm at $3.5 billion to $4 billion including debt, the people said. Some investors that helped buy the shipping assets five years ago are seeking to cash out, said one of the people, asking not to be identified because the matter is private.

Hahn & Co. has started sounding out some shipping firms and infrastructure investment funds to gauge their interest, the people said.

H-Line Shipping was formed in 2014 after Hahn & Co. took over the non-container shipping operations from Hanjin Shipping Co., which collapsed two years later. In 2016, H-Line Shipping acquired the dry bulk transportation business of debt-laden Hyundai Merchant Marine Co.

The shipping company operates vessels that transport raw materials such as iron ore and coal as well as liquefied natural gas, according to its website. State-owned Korea Gas Corp. and Posco, the country’s biggest steelmaker, are among its clients.

As part of the review, Hahn is also considering the alternative of raising a new infrastructure fund to acquire H-Line Shipping, which would allow Hahn to continue managing the business while returning cash to the existing fund’s investors, according to one person. Deliberations are at an early stage, and Hahn & Co. could still decide against pursuing a deal, the people said.

A representative for the private equity firm declined to comment.

Low rates and high fuel costs have forced global shipping companies to seek ways to raise cash and clean up their balance sheets by selling non-core assets. In April, Denmark’s A.P. Moller-Maersk A/S spun off its drilling unit to focus on its core transport activities.

Scott Hahn, a former chief investment officer for Asia at Morgan Stanley Private Equity, founded Seoul-based Hahn & Co. in 2010. The buyout firm snapped up shipping assets in South Korea as the nation’s container lines were selling non-core business in their efforts to stay afloat after years of losses amid excess capacity and slow economic growth. Last year, Hahn & Co. agreed to buy 79% of SK Shipping Co. and paid down its debt in a deal valuing the company at $3.7 billion.

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