South Korea’s GS Engineering and Construction Corp. (GS E&C) made a surprise bid over Doosan Infracore Co., adding to the heat over the race that already has big corporate and capital contenders from home and abroad.

According to investment banking sources on Wednesday, GS E&C was confirmed as one of the seven bidders named in the preliminary tender for a 36.27 percent stake in Doosan Infracore, the heavy equipment unit of the country’s conglomerate Doosan Group. The construction company is said to have formed a consortium with domestic private equity fund Dominus Investment.

It is pitted against Hyundai Heavy Industries Co.-led consortium, Eugene Group and private equity funds including Glenwood PE, MBK Partners and EastBridge Partners, the sale advisor Credit Suisse announced on Oct. 7.

GS E&C’s joining was unexpected, but convincing, analysts said. The addition could help the company diversify its portfolio primarily on construction and plant business. In the first three months, GS E&C earned 54 percent of its total revenue from construction/housing and 36.9 percent from plant/power.

The diversification could add more security in GS E&C’s revenue base amid housing market uncertainties. The heavy machine and equipment business could also help the engineering company complete vertical integration. The growth potential of Doosan Infracore in overseas markets is another reason for GS E&C to take part in the bid. Doosan Infracore shipped 10,000 excavators to China in the first six months.

GS E&C could be a game-changer, market analysts expected. It has 2 trillion won ($1.76 billion) in cashable assets as of the end of June and formed an alliance with financial investor Dominus Investment. The builder has reported about 1 trillion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) since 2018.

The sale of stake in Doosan Infracore estimated at 1 trillion won is the keystone in self-rescue plan of Doonsan Group to meet the requirements for the state bailout of cash-strapped Doosan Heavy Industries & Construction Co.

Doosan Group earlier pledged to raise 3 trillion won through asset divestments in exchange for receiving 3.6 trillion won in financial support from state banks. It has so far completed the sale of Doosan Mottrol, Neoplux, Doosan Solus, Club Mow Country Club and Doosan Tower.

Doosan Infracore shares closed Thursday down 0.57 percent at 8,790 won. GS E&C shares ended up 1.44 percent at 28,200 won and

Hyundai Heavy Industries Holdings 0.44 percent higher at 226,500 won.

By Kang Doo-soon, Kang Woo-seok and Lee Ha-yeon

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