Hyundai, Cerberus ink multi-year deal for wind infra in Subic

Korean maritime solutions firm HD Korea Shipbuilding and Offshore Engineering (HD Hyundai KSOE) is set to manufacture offshore wind structures in a shipyard in Subic, Zambales as part of its multi-year lease deal with its owner Cerberus Capital Management.  

In an online press conference on May 15, Cerberus Senior Managing Director Alexander Benard said the lease agreement involves HD Hyundai leasing a portion of the 350-hectare Agila Subic, specifically the larger of two dry docks in the shipyard along with its surrounding facilities like sheds, warehouses, staging areas.

The agreement was initially announced at Malacañang Palace on Tuesday, May 14, graced by President Ferdinand Marcos Jr.

President Ferdinand Marcos, Jr. recently welcomed the landmark leasing agreement between Cerberus and Agila Subic and leading maritime manufacturer HD Korea Shipbuilding and Offshore Engineering (HD Hyundai KSOE) at Malacañang Palace. With him are Sungjoon Kim,, Chief Executive Officer of HD Hyundai KSOE, and Alexander  Benard, Senior Managing Director of Cerberus (Singapore) Pte. Ltd.


"It will be bringing maritime manufacturing back to Subic at a very large scale with an initial focus on offshore wind platforms. This will create very substantial employment and really bring that economic activity and vitality back to the Subic Bay region," said Benard. 

The infrastructure that will be initially constructed will involve core physical structures found at the bottom portion of the offshore wind platforms, which Benard described as a "similar type of advanced maritime manufacturing." These outputs will be used for both the domestic market and for export overseas.  

He clarified that Hyundai may eventually begin constructing commercial ships.  

Overall, HD Hyundai KSOE aims to create a "state-of-the-art maritime complex" for handling offshore wind structures, ship block fabrication, ship repairs, and other services, according to its Chief Executive Officer (CEO) Sungjoon Kim in a statement.

Benard remarked that, for the initial period, they will ramp up the site preparations and modifications, and proceed with hiring, to accommodate the needs of HD Hyundai, and are expecting to start manufacturing operations within the next 12 to 18 months.

"There will be some investments that are made by ourselves and Hyundai over the next year and a half, in the tens of millions or potentially hundreds of millions in order to make the necessary modifications to the site area," he explained.

Once operational, Benard projected it would result in the employment of thousands of Filipino workers. 

“This initiative represents a major opportunity to create jobs and reinvigorate the local economy, which will help to further establish the Philippines as a global maritime powerhouse," said Kim.

Since April 2022, Cerberus acquired and rebranded Agila Subic from Hanjin Heavy Industries and Construction Philippines.

"We decided to pivot to a multi-use approach for this facility, meaning to take the large asset and splice it into different areas where we would have different operators leasing the areas from us to create a more diversified business model for the asset, and optimize its use to create a facility that is more economically retainable and can withstand different cycles, including shipbuilding cycles," said Benard.

Currently, operators or lessors of portions of the shipyard are a logistics firm, the Philippine Navy, and one of Cerberus' portfolio companies SubCom, which uses Agila Subic as its Asia hub to store cables and run cable ships for its international submarine cable services.

Benard shared that it has a single remaining area- the smaller of the two dry docks- that is stil available for leasing in the shipyard. They are already engaged with potential lessors for the lot, he added.