A consortium of Hyundai Heavy Industries Holdings (HHIH) and Korea Development Bank Investment (KDBI) was selected as the preferred bidder for Doosan Infracore on Thursday (December 10), despite controversy over the role played by KDB during the transaction.

If the deal is closed early next year as planned, the consortium will be the largest shareholder of Doosan Infracore with a 36.4% stake. The company would be sold for around 700 billion won ($640 million), well below Doosan’s desired price of 1 trillion won.

Doosan Infracore is a unit of Doosan Heavy Industries & Construction, but the sale process has been controlled by state-run lender KDB because Doosan Group is undertaking restructuring measures. KDBI was established as a subsidiary of KDB last year to facilitate the swift restructuring of distressed companies.

Market insiders have been widely opposed to KDBI participating in the sale of Doosan Infracore because of its relationship to KDB, arguing that the consortium’s competitors – including major private equity firms and strategic investors – could be disadvantaged due to KDBI having more access to information on Doosan Infracore through its parent.

“It is an open secret that KDB has had an impact on the sale process,” said one source.

The consortium of HHIH and KDBI has been keen to acquire Doosan Infracore even though other potential buyers had considered pulling out, citing a lack of due diligence documents. Financial investors suggested Doosan Heavy might be trying to create favorable conditions for strategic investors, as it refused to provide some documents due to possible technology leakages.

HHIH and KDBI reportedly offered an acquisition price in the 700 billion won range, which is 200 billion won to 300 billion won less than Doosan Group had wanted. It is likely to be considered a cheap price, even if Eugene Group was the only competitor remaining after the final round of bidding.

Some market insiders pointed out that the credibility of KDB-led restructuring processes might be weakened due to its role. KDBI has joined the race for Hanjin Heavy Industries & Construction, whose final round of bidding is expected to take place next week.

“After all, other potential buyers just played second fiddle (to the consortium) in the Doosan Infracore sale deal,” said an industry source. “The deal seems to have proved that KDBI’s participation has a decisive impact on a deal led by KDB.” (Reporting by Ik-hwan Choi)