H&Q expected to act as 'white knight' for Hyundai Group chairwoman

Hyundai Group Chairwoman Hyun Jeong-eun delivers a speech during a ceremony at Hyundai Elevator's headquarters in Chungju, North Chungcheong Province, in this July 2022 file photo. Courtesy of Hyundai Group

By Park Jae-hyuk

H&Q Korea Partners is expected to help Hyundai Group Chairwoman Hyun Jeong-eun avoid losing management control over Hyundai Elevator to Schindler, a Swiss elevator maker which is the second-largest shareholder of the Korean elevator firm, according to industry officials, Wednesday.

The local private equity firm (PEF) was reportedly chosen as the preferred bidder to acquire a combined 260 billion won ($203 million) worth of convertible and exchangeable bonds issued by Hyundai Network and a 40 billion won stake in Hyundai Elevator from the chairwoman.

If both sides reach an agreement, Hyun will be able to pay back over 200 billion won she borrowed from M Capital at an annual interest rate of 12 percent to compensate Hyundai Elevator in compliance with a court order.

The Supreme Court in March ruled in favor of Schindler, which claimed that Hyun had caused damage to Hyundai Elevator by signing derivative financial product contracts between 2006 and 2014. The deal was regarded as an attempt to maintain her control over Hyundai Merchant Marine (HMM), an affiliate of Hyundai Group now under the supervision of creditors led by the state-run Korea Development Bank.

In April, the chairwoman finished paying 170 billion won and interest in arrears to Hyundai Elevator, as she borrowed money from M Capital by using her shares in Hyundai Group affiliates as collateral. Because she agreed to repay her debt by August, she is said to have talked with multiple PEFs regarding their investments in Hyundai Group affiliates.

Among them, H&Q was reportedly recognized for its track record, including the acquisition of Mando in collaboration with HL Group in 2008. The PEF currently holds around 300 billion won in cash, as it raised a fund worth 500 billion won in 2020.

If Hyun fails to pay back H&Q by the agreed deadline, however, the PEF may also meddle in the management of Hyundai Elevator.