South Korean marine engineering firm Hyundai Global Service has reportedly almost raised about 800 billion won ($724.6 million) from KKR in a pre-initial public offering.

The investment will give KKR about 40% of the company at a valuation of 2 trillion won, according to industry sources. The private equity firm recently hired Mirae Asset Daewoo and Hana Bank to arrange the financing for the investment.

Hyundai Heavy Industries Holding (HHI Holdings) entered into exclusive negotiations with the U.S. private equity firm last summer, after first sounding out potential buyers for a minority stake in Hyundai Global Service at the beginning of last year. The deal with KKR is expected to be signed before the end of next month.

Hyundai Global Service, which is wholly owned by HHI Holdings, provides maintenance and repair services for ships, with most demand coming from shipbuilding affiliates of the holding company.

According to financial statements, the company’s revenue increased to 789.5 billion won in 2019, from 413.3 billion won in 2018 and 238.2 billion won in 2017. Consolidated revenue was 809 billion won at the end of 2019. Earnings before interest, tax, depreciation and amortization rose to 112.3 billion in 2019, from 73.6 billion in 2018 won and 56.7 billion won in 2017.

The firm is expected to benefit from rising demand for ship repairs as marine environmental regulations are tightened, and it also has a strong customer base from affiliates of HHI Holdings. Additional orders are expected if Hyundai Heavy Industries’ takeover of Daewoo Shipbuilding & Marine Engineering, which is currently under regulatory review, is completed. (Reporting by Hee-yeon Han)