Korea Development Bank preparing for $2bn sale of Daewoo E&C: report

The Korea Development Bank (KDB) is forming a team to manage the long-sought sale of Daewoo Engineering & Construction, in which it holds a 50.75% stake, reports Korean news site, Pulse. 

The bank has been trying to sell its stake in Daewoo E&C since it was forced to buy it back in lieu of debt repayments after a failed acquisition by the Kumho Asiana Group in the wake of the 2008 financial crash.

The bank has since looked for an opportunity to sell its share; two attempts to find a buyer have so far failed. The bank is reported to be hoping to raise around $2bn from the deal.

Analysts expect success this time because Daewoo E&C’s shares have been rising fast as investors respond to its strong earnings.

After a long decline, its share price plunged to 2,530 won as the pandemic broke out last year, but it closed trading this week at 7,980 won, a six-year high, putting the company’s market capitalisation at around $3bn.

In the first quarter of this year, Daewoo E&C’s operating income was 53% higher than market projections.

Pulse said multiple sources told it that KDB is working with a number of brokerages and accounting firms to decide an adviser for the sale process.

Daewoo E&C works across the range of construction projects from infrastructure and energy to high-rise buildings. Its website says it aims to be among the global top 20 contractors by 2025.

Among the possible Korean bidders are the mid-sized contractor Jungheung Construction, developer DS Networks and private equity investment firm Hahn & Company.

Possible overseas bidders are China State Construction Engineering Corporation, presently the world’s largest contractor, and the Abu Dhabi Investment Authority.

KDB’s last bid to sell Daewoo E&C fell through in 2017 after the preferred bidder, Hoban Construction, discovered massive losses in Daewoo E&C’s overseas projects.

Image: Among Daewoo E&C’s notable projects is the Wolseong Nuclear Power Plant, which became operational in 2012 (IAEA Imagebank/CC BY-SA 2.0)

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