Hyundai Oilbank has successfully attracted investment from Saudi Arabia’s state-owned oil giant Aramco in the amount of up to KRW 1.8 trillion.

Hyundai Heavy Industries (HHI) Group on Monday announced it has signed a pre-IPO investment agreement with Saudi Aramco, which is worth up to KRW 1.8 trillion. This agreement entitles Saudi Aramco to purchase a maximum of a 19.9% stake in Hyundai Oilbank. Valuing the business at KRW 10 trillion in market capitalization, Saudi Aramco is expected to buy the South Korean oil refiner’s shares for KRW 36,000 each. This contemplated investment is to be approved at the respective board meetings of the two parties.

It is known that Saudi Aramco, the world’s largest oil company responsible for 15% of the crude oil produced globally, has been attracted to the impressive growth potential of Hyundai Oilbank as demonstrated by its notable advancement ratio (40.6%) and profitability, both of which are the highest among South Korean oil refiners. The mutual trust built upon a general memorandum of understanding (MoU) signed between Saudi Aramco and HHI Group in November 2015 to collaborate on various business development opportunities has also had a favorable influence upon the investment decision.

“The initial public offering of Hyundai Oilbank we have been preparing so far will be inevitably delayed now that we need to wait for this pre-IPO placement process to complete in due course,” said an official of the group, adding “the funding from the contemplated share sale to Aramco will be mainly used to invest in new business opportunities and to improve our financial structure.”

HHI Group also stressed “the significance of this agreement with Saudi Aramco is two-fold: not only will the sheer fact that the world’s largest oil company is purchasing the shares likely increase Hyundai Oilbank’s value greatly, but also this opportunity for us to be part of Saudi Aramco’s business network will help elevate our business capabilities to the next level.” The group is counting on its joining the network to pave the way for new business opportunities in areas such as petrochemistry, oilfield development and lubricant manufacturing.

Much synergy has been observed between HHI Group and Saudi Aramco so far, collaborating in many areas including shipbuilding and engine construction. A prime example is the ongoing construction project to build Saudi Arabia’s largest shipyard as part of the nation’s industrial development plan dubbed “Vision 2030,” with a plan to establish an engine joint venture within this year. Working closely together, the two parties are mutually benefiting each other in that HHI Group is given a chance to drive business growth and make inroads into the Middle East market while Saudi Aramco is contributing to expansion of the nation’s infrastructure and job creation.

“The ongoing multifaceted business cooperation with Aramco will positively impact our prospects of winning future contracts from Middle East countries to build ships and offshore plants,” said the official of HHI Group. “We are poised to do our utmost to leverage this investment agreement to foster closer rapport with Aramco, to secure inroads into the Middle East market to expand our business.”