US private equity circles Korea’s K Shipbuilding as sale heats up

American investment interest in South Korea’s shipbuilding sector is intensifying, with Taekwang Group partnering with US private equity giant TPG to bid for K Shipbuilding. The duo has submitted a letter of intent seeking management control of the Jinhae-based yard, positioning themselves among the three shortlisted contenders for the asset, formerly known as STX Offshore & Shipbuilding.

The move comes as Washington’s “Making American Shipbuilding Great Again” (MASGA) push opens new avenues for collaboration with Korean yards. K Shipbuilding has drawn particular attention due to its proximity to the Republic of Korea Navy’s Fleet Support Unit and its history of constructing naval vessels. The yard is actively pursuing US Navy maintenance and repair opportunities, targeting potential contracts to service up to 32 ships a year in the coming decade — a prospect that has caught the eye of American funds looking for strategic footholds in Asia.

K Shipbuilding has staged a significant recovery since being bought out in 2021 by a domestic private equity partnership. The company was officially offered for sale in July, with its owners setting a valuation goal of as much as KRW 1 trillion (around $730 million). The planned divestment represents a remarkable rebound for a shipyard that only a few years ago was struggling to survive.

Once ranked as the world’s fourth-largest shipbuilder by orderbook, STX Offshore & Shipbuilding faltered after the 2008 financial crisis and was placed under court receivership in 2016. Its fortunes began to shift when a consortium led by KHI Investment and United Asset Management Company acquired it for KRW 250 billion in 2021, wagering on a revival in global shipbuilding demand. That turnaround now appears to be paying off as global investors line up for a stake in its future.