Six or seven companies have reportedly participated in the first round of bidding for ship modules builder Shinhan Heavy Industries, with Sejin Heavy Industries and a consortium of NH Private Equity (PE) and Opus PE seen as the early frontrunners.
Sale manager Samjong KPMG has opened a virtual data room for potential buyers of the subsidiary of Daewoo Shipbuilding & Marine Engineering, and contenders in the preliminary round have been invited to conduct due diligence, industry sources said. The final round of bidding is scheduled for February 22.
Striker Capital Management, a consortium of Bumyang Construction, Darwin Investment and Mugunghwa PE have also submitted bids, but only Sejin Heavy Industries and the consortium of NH PE and Opus PE have conducted due diligence.
“Considering the Lunar New Year holidays, the due diligence period has only about a week left,” said an industry source, adding, “As only NH PE-Opus PE and Sejin Heavy Industries are active in the due diligence, the genuine potential buyers seems to have been narrowed down to two.”
Sejin Heavy Industries, a key shipbuilding equipment supplier to Hyundai Heavy Industries Group, appears to be keen to create synergies with Shinhan Heavy Industries, an offshore module manufacturer 89.22% owned by Daewoo Shipbuilding & Marine Engineering. Sejin Heavy Industries and Shinhan Heavy Industries are both located at Onsan-eup in Ulju-gun, Ulsan City, only about 2.5 kilometers apart.
The consortium of NH PE and Opus PE is expanding its portfolio as it believes that the shipbuilding industry is starting to turn around. The two deep-pocketed PE firms, which created a fund worth 306.1 billion won ($275 million) last year, were selected as a preferred bidder for Hanjin Heavy Industries & Construction after surprisingly joining hands with Dongbu Corporation.
However, the two early contenders could still face further competition, because potential buyers that participated in the preliminary round of bidding could decide to form a consortium like NH PE and Opus PE did in the Hanjin Heavy Industries deal.
Strategies for the Shinhan Heavy deal are expected to emerge until the last minute, as a large number of firms have shown interest. (Reporting by Se-hun Jo)