Kiwoom Private Equity and Koreawide Partners have hired Earnst & Young Han Young to sell their 100% stake in Dongbu Express, industry sources said on September 2.

The consortium of the two firms bought the express bus company for 88.7 billion won ($74.6 million) in 2017 from Dongwon Industries, which divested non-core businesses to focus on logistics.

Dongbu Express recorded revenue of 51.2 billion won in 2019, down from 56.7 billion won in 2016, the year before its acquisition by the consortium. This was partly due to the opening in December 2017 of the Seoul-Gangneung KTX train line, ahead of the Winter Olympic Games in nearby Pyeongchang, Gangawon Province, industry watchers said.

“Previously there were few means of transportation to Gangawon Province other than express buses, and Dongbu Express had an edge because it took a large portion of routes to this area,” an industry insider said. “But things have changed after the operation of the new train line and with no more benefits from the Olympic Games.”

The company has also made little progress on the development of its real estate. It initially planned to develop land near its bus terminals in Wonju, Donghae, Gangneung and Sokcho, but only land in Donghae was sold to a local real estate investment firm earlier this year.

If its remaining real estate assets help attract investors, Dongbu Express could be valued at an enterprise value (EV)/  earnings before interest, tax, depreciation and amortization (EBTIDA) multiple of about nine times, analysts said. This means the company could be worth as much as 80 billion won based on its EBTIDA of 9 billion won in 2019. However, the price could be lower as the company’s financial performance is expected to be worse than last year due to the Covid-19 crisis. (Reporting by Ik-hwan Choi)