South Korea’s Doosan Group faces further liquidity pressures after it failed to attract enough bids to proceed with the auction process for copper foil maker Doosan Solus, with potential investors complaining that the company was overvalued. 

Cash-strapped Doosan Group has raised a total of 2.4 trillion won (US$1.9 billion) from creditors like Korea Development Bank and the Export-Import Bank of Korea since March. The conglomerate hopes to secure another 3 billion won ($2.4 billion) by selling off non-core assets like Doosan Solus. 

However, many investors that had shown initial interest in Doosan Solus pulled out from the first round of bidding on Tuesday (June 2), sources said. They included Lotte Chemical, which is one of the country’s major chemical companies, and several global private equity firms.

Industry watchers were not surprised, as Doosan Group has reportedly put a valuation of 1.5 trillion won ($1.23 billion) on the unit. SkyLake Investment is said to have offered less than half this amount in negotiations on a private purchase of Doosan Solus, which ultimately collapsed, and most prospective buyers now price the company at less than 1 trillion won. 

Analysts said that potential buyers would always have an edge in negotiations, as the sale is part of Doosan Group’s restructuring plan and investors are well aware of its cash issues.

“[Doosan Solus] was placed on the market in what could be considered a fire sale, and yet the seller put a high price tag on it,” said an official from one of the potential buyers. “We studied the company but couldn’t find enough factors to justify such a high price.”

Another industry insider added: “Doosan Group appeared to be unwilling to lower its valuation of Doosan Solus, with little room for negotiation.” 

There was also a lukewarm response to the planned sale of Doosan Group’s hydraulic component manufacturer, Doosan Corporation Mottrol, with potential investors blaming a lack of communication by the conglomerate.

Several companies, including private equity firms, reportedly submitted bids for Doosan Corporation Mottrol in the first round of bidding last week. But the seller is still open to offers for the business, indicating that fewer investors than expected had joined the bidding. (Reporting by Hee-yeon Han)