Hoban Construction has put its golf course Sky Valley Country Club (CC) up for sale, seeking to secure money for possible mergers and acquisitions (M&A) deals.

The company has hired Samil PwC to arrange the sale process of Sky Valley CC, a 36-hole golf course in Yeoju, Gyeonggi Province, and received letters of intent on September 18, industry sources said on Monday (September 21).

Market insiders said this is the right time for the sale given a series of successful golf course deals. Domestic golf clubs have been sold at a higher-than-expected price in recent months.

Having a sound financial structure is less likely to be a reason for the company’s sale of Sky Valley CC as Hoban Construction’s major subsidiaries have relatively stable financial structure. Hoban Construction and Hoban Property each own a 45% stake in Hoban Sky Valley, the operator of Sky Valley CC and the two firms are in a net cash position of 1 trillion won ($862 million) and 120 billion won, respectively, as of the end of 2019.

Recently, Doosan Heavy Industries & Construction sold Club Mow CC and Hanwha Hotels & Resorts has put Golden Bay Golf & Resort up for sale, both in a bid to improve their financial structure.

Sky Valley CC is considered a cash cow asset of Hoban Construction among its four golf courses, with the golf course posting revenue of 19 billion won and EBITDA of 7 billion won over the past five years.

Market watchers said the company has put Sky Valley CC up for sale to carry out M&As, especially to acquire a construction company. “Hoban Construction has been continuously moving to acquire builders,” said an industry source. This is probably to supplement its weaknesses as its business focuses on the housing division, the source added.

Hoban Construction previously participated in a race to acquire a controlling stake in Daewoo Engineering & Construction (E&C). The construction company was picked as the preferred bidder by state-run Korea Development Bank in January 2018 to purchase the bigger rival for approximately 1.6 trillion won. However, Hoban Construction dropped its bid with Daewoo E&C facing big losses in its overseas projects in Morocco and Qatar.

“Considering the recent mood in the golf club M&A markets, Sky Valley CC is highly likely to be sold,” said a second industry source. “We will see where Hoban Construction will use the proceeds from the sale and whether it will try to acquire a builder again.” (Reporting by Byung-yoon Kim)