More than 10 bidders are vying for a 51 percent stake in Daewoo Engineering & Construction Co. (Daewoo E&C), raising the prospects for state-run Korea Development Bank to pocket around 2 trillion won ($1.8 billion) from the sale.
According to investment banking sources on Monday, Korea’s Hoban Construction Co., TRAC Development Group and U.S. engineering consultancy Aecom were among the 10 candidates that submitted their preliminary bids for the country’s third largest builder.
Hoban Construction is said to be the most eager candidate with ambition to become the No. 3 construction company through the merger with Daewoo E&C. It had bid for Kumho Industrial Co. in the KDB-led auction in 2015 and managed to scale up through the purchase of Ultra Construction & Engineering last year.
TRAC Development Group, a Seoul-based development investor, is also reported to have taken part in the bid under a consortium with two large Indian construction companies. This is its second bid for Daewoo E&C as it also attempted to buy the company from Kumho Asiana Group in 2009. The investor is currently engaged in the reconstruction of Iraq and boasts a strong global network, which it plans to further expand by acquiring Daewoo E&C.
KDB, the main creditor and stakeholder of Daewoo E&C, is seeking to sell its 50.75 percent stake in the construction firm plus management rights for about 2 trillion won and name a preferred bidder by January.
The state lender acquired the stake in 2011 for 3.2 trillion won through a private equity fund.
Daewoo E&C’s share price has nearly halved since then, hovering between 6,000 and 7,500 won.
Given its current share price, KDB would be losing more than 1 trillion won if it manages to sell the stake for 2 trillion won.
KDB Chairman Lee Dong-geol in a recent National Assembly audit maintained that the bank will proceed with the sale to prevent a further dent on its balance sheet.
Shares of Daewoo E&C closed Tuesday down 0.94 percent at 6,290 won.
By Park Eun-jin and Kim Hyo-jin
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