South Korea’s private equity firms are actively discussing various ways to take part in Doosan Group’s restructuring amid heightened attention to the group’s intensive self-rescue plan after receiving a massive bailout from state-run banks.
According to investment banking (IB) industry sources on April 24, Doosan Group has hired Samil PwC to lead a sale process of its affiliate Doosan Solus. An IB industry source said the sale process will be kicked off in earnest in the near term.
With many potential buyers expected to join a race for Doosan Solus, they appear to mull over to come up with differentiated acquisition strategies. Instead of simply taking over an affiliate of the conglomerate, some potential buyers are likely to pitch more effective restructuring plan to the group, including bundling more than one affiliate together to secure liquidity.
Such plan is also positive for Doosan Group to maintain its management rights rather than selling each affiliate separately to overcome the current challenges. In the past, Doosan Group had bundled its affiliates together and received funding from financial investors amid a liquidity crisis.
Doosan Group packaged Doosan DST, bottle cap maker Samhwa Crown, operator of Burger King and KFC SRS Korea and a 20.54 percent stake in Korea Aerospace Industries together in 2009.
The group established a special purpose company Doosan Investment Portfolio (DIP) Holdings to put the four affiliates and assets under its umbrella, and sold 49 percent in the special purpose company to IMM Private Equity and Mirae Asset PE. The deal helped the group keep its management rights while at the same time securing funds.
It is said that a prospective buyer currently is mulling over the option to bundle three or four affiliates together, possibly Doosan Solus, Doosan Construction & Engineering and Doosan PureCell. An IB industry source said that if bundled, the sale process may be carried out at a faster pace than selling affiliates separately.
In the meanwhile, strategic investors and financial investors may join hands to form a consortium to take part in the Doosan Group’s restructuring. Funds specialized in restructuring are reportedly contacting strategic investors. “A concrete restructuring plan has to be made soon in order for debt-saddled Doosan Heavy Industries & Construction to repay its debts set to mature this year. Financial investors specialized in restructuring appear to attract strategic investors as they are aware of creditors’ characteristics and are able to propose efficient restructuring plans,” said a PE industry source. (By reporter Kim Byung-yoon)