The competition for state participation in Daewoo Engineering & Construction Co. is expected to fall on two medium-sized developers in Korea after potential applicants from abroad resign.
According to multiple real estate and brokerage sources on Thursday, midsize construction company Jungheung Construction and real estate developer DS Networks have decided to bid for Daewoo E & C’s tender on June 25th.
Private equity investment firm Hahn & Company reportedly lost interest, as did foreign capital such as the Abu Dhabi Investment Authority and China’s largest construction company, China State Construction Engineering Corporation, the sources said.
The names came up after inquiring about the deal with owner KDB Investment.
KDB Investment, a private equity firm of the Korea Development Bank, is offering its 50.75 percent stake in hopes of recovering nearly $ 2.5 billion that the state bank used to buy back the construction company from Kumho Asian Group, the takeover of which was promoted by the government in the amount of 6 billion US dollars in 2005. The group is on the brink of bankruptcy following the 2008 financial crisis.
The state-owned company is attempting to sell the sale again this year due to a stronger performance by the construction company and its share price.
Jungheung Construction is said to be looking to pull through the deal managed by Mirae Asset & Security with a view to Daewoo E & C’s robust reputation and portfolio abroad. Jungheung plans to pitch its own financing instead of seeking credit.
DS Networks has formed a consortium with the domestic private equity company SkyLake Equity Partners and the British investment company IPM Group for the tender advised by Morgan Stanley.
The developer hopes that the established developer will make the leap into the construction mainstream and place 6 on the domestic market.
State lender Korea Development Bank’s previous attempt to sell Daewoo E&C failed in 2017 after Hoban Construction, selected as the preferred bidder, withdrew within just nine days after discovering massive losses on Daewoo E & C’s overseas projects .
However, price differences could be a sticking point this time.
KDB Investment, responsible for repaying the public rescue fund, wants nearly $ 2 billion. It plans to charge over 9,000 won for its ownership of 2,010,931,209 shares, which equates to around 1.8 trillion won.
KDB had bought the shares in 2010 for 11,123 trillion won and an additional 2.18 trillion won at 18,000 won for a total of 3.18 trillion won. She had given the stocks of around 6,500 won to the PEF unit.
Bidders are expected to keep an eye on the shares at 8,000 won each.
Daewoo E&C shares were down 2.56 percent to 8,360 won in the morning session on Friday.
By Hong Jang-won, Chung Seok-hwan and Lee Soo-min
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