UPDATE 2-Hyundai Oilbank to delay $2bln IPO amid Iran sanctions - sources

Thu Mar 29, 2012 3:31am EDT

* IPO initially planned for May or June, now H2

* Oilbank says trying to minimize Iran sanctions impact

* Follows Chinalco delay to unit's IPO on similar concerns

By Ju-min Park

SEOUL, March 29 (Reuters) - South Korean refiner Hyundai Oilbank is delaying plans for an initial public offer worth up to $2 billion, partly on investor concerns over its links to Iran, sources said, the second big Asian IPO to be snagged by Western sanctions against Tehran.

Hyundai Oilbank, a heavy user of Iranian crude, is controlled by Hyundai Heavy Industries which initially aimed to list it in South Korea as early as May but is now looking at the second half of the year, three sources with knowledge of the matter told Reuters on Thursday.

The delay follows the postponement of another Iran-linked IPO planned for Hong Kong and reflects widening fallout from the U.S.-led sanctions against Iran. Though targeted at Iran's crude exports, they have not only upset the global oil trade but also insurance, international trade finance and now share issues.

Even firms with no direct oil link to Iran have been impacted, with Chinese telecoms equipment maker ZTE Corp volunteering last week to "curtail" its business in Iran after a report that it had sold a powerful surveillance system into the country.

"The concerns around Iran arose and people have been analysing what impact they could have on the (Hyundai Oilbank) listing," said one of the sources who requested anonymity because they were not authorised to speak to the media.

Hyundai Oilbank made about 20 percent of its crude purchases from Iran last year, according to separate industry sources, a higher ratio than that of bigger local peer SK Energy.

INVESTMENT BANKS MAY ALSO BE HURT

The news follows Chinese state-owned aluminum producer Chinalco's decision to delay the $500 million Hong Kong IPO of an engineering subsidiary until at least June, on similar concerns, other sources said on Wednesday..

Delayed floats could also hurt investment banks' business in the region, who are already battling a more than 70 percent drop in IPO volumes in the first quarter of 2012.

Chinalco's to-be-floated China Aluminum International Engineering (Chalieco) has business contracts with Iran, but these would have expired by the time of its delayed Hong Kong listing, said the sources familiar with that case.

Chinalco has hired Morgan Stanley and UBS along with China International Capital Corp to handle the IPO.

The Hyundai Oilbank IPO is being handled by Citigroup and BofA Merrill Lynch, among others, sources say.

Shares in Hyundai Heavy fell 3 percent after news of the Hyundai Oilbank IPO delay, far outpacing a 0.9 percent fall in the overall market.

PRESSURE MOUNTS

The United States, backed by Europe, has been tightening sanctions against Iran in an effort to force Tehran to curb its nuclear programme. The West says Iran is trying to develop nuclear weapons, an accusation Tehran denies.

South Korea is feeling the pressure to cut back on its Iranian crude purchases, which accounted for 9.4 percent of its entire imports last year.

South Korean refiners have been cutting Iranian imports to ensure Seoul can petition its ally, the United States, for a sanctions waiver, a government source has said.

Hyundai Oilbank said in a March 27 regulatory filing that it was trying to minimise any impact on imports from the sanctions against Iran by securing alternative sources.

Hyundai Oilbank, the South Korea's smallest oil refiner with 8.5 trillion won ($7.5 billion) in assets, was bought by Hyundai Heavy from International Petroleum Investment in 2010. The IPO proceeds will be largely used to repay Hyundai Heavy's debt.

Hyundai Oilbank declined to comment on Thursday.

A spokesman at Hyundai Heavy Industries, which owns 91 percent of Oilbank, declined to comment on the possible delay of the IPO. The parent firm has not publicly given a time frame and has yet to apply for preliminary approval from the local bourse.