Hyundai Motor Co. and Kia Motors Corp. are planning to raise up to one trillion won through the issuance of green bonds.
Each of the two companies will issue more than 300 billion won worth of green bonds in February. If the outcome of a demand forecast (pre-subscription) for institutional investors is favorable, they will consider financing up to 500 billion won to 600 billion won each.
The two companies will soon go through the process of selecting a lead manager and start preparations for the bond issuance in earnest.
This will be the first time for Hyundai and Kia to issue environmental, social and governance (ESG) bonds. The two companies will use the funds raised this time to invest in eco-friendly cars such as hydrogen cars and electric vehicles.
Hyundai Motor and Kia Motors are continuing to make aggressive investments with the goal of joining the world’s top three eco-friendly car manufacturers by 2025.
They plan to increase global sales of hydrogen and electric vehicles to 670,000 units within five years. They decided to invest a total of 60.1 trillion won to boost their future business capabilities such as electric vehicles, hydrogen fuel cells, autonomous driving and urban air mobility (UAM) during this period.
The two companies have been garnering much attention from investors thanks to investment in a hydrogen fuel cell plant in China and the possibility of joining hands with Apple to develop self-driving electric vehicles.
Analysts forecast that considering the growing importance of ESG in Hyundai Motor Group’s growth strategy, Hyundai Motor affiliates will become increasingly active in issuing ESG bonds. Hyundai Steel is set to raise 250 billion won at the end of January by issuing green bonds for the first time since its foundation.
Until 2020, only financial affiliates of Hyundai Motor Group such as Hyundai Card and Hyundai Capital issued ESG bonds, but manufacturing affiliates have also begun to enter the ESG bond market in earnest since the beginning of 2021.
“Since the group develops and produces eco-friendly cars through a vertically integrated system, its parts affiliates are highly likely to start issuing ESG bonds,” an IB industry source said.