According to investment banking industry sources on November 13, about 10 firms at home and abroad, such as local construction firm Hoban Construction and US-based Aecom, submitted their preliminary bids to buy a controlling stake in Daewoo Engineering & Construction from the state-run Korea Development Bank (KDB). In 2015, Hoban Construction participated in the bid to purchase Kumho Industrial from the KDB.
The KDB plans to select an eligible bidder as early as within this week and proceed the binding bidding next month. The bank expects to pick a preferred bidder in January next year.
The state lender is trying to sell its 50.75 percent stake in Daewoo E&C owned via a special purpose fund dubbed “KDB Value VI.” The 50.75-percent stake in Daewoo E&C is valued at some 1.34 trillion won (US1.2 billion) based on the closing price on November 13.
The KDB acquired its stake in Daewoo E&C at 3.2 trillion won (US$2.86 billion) through its private fund in 2011. The bank cannot avoid taking losses of more than 1 trillion won (US$892.86 million) even considering control premiums when it sells the stake at the current level of its stock price.
During a recent National Assembly hearing for a routine legislative audit, KDG Chairman Lee Dong-geol said, “We will sell the stake in Daewoo E&C for the competitiveness in the long term regardless of the selling price.” Therefore, the KDB is expected to proceed the sale even when it makes a loss. The bank reflected its principle selling the security holdings at market prices into its articles of association.