이 기사는 2020년 04월 17일 08:00 thebell 에 표출된 기사입니다.

Doosan Group’s anticipated restructuring initiative has left its construction arm, Doosan Engineering & Construction, highly likely to be offloaded by the South Korean conglomerate, drawing strong attention not only from strategic investors but also from financial investors.

Several strategic investors are weighing an acquisition of Doosan E&C, the construction company known for its apartment brand We’ve, sources familiar with the matter said on April 13. They include mid-sized builders based in regional areas as well as those seeking to expand their business scope to include construction.

“Although Doosan E&C has long been named as a possible candidate for sale in the M&A market, talks between potential buyers and the seller made little progress as they couldn’t come close to agreeing on the company's valuation,” an industry source said. “Doosan Group’s restructuring efforts would mean a greater chance of selling Doosan E&C.”

Doosan E&C so far has been approached mostly by strategic investors. Financial investors, on the other hand, have been more cautious in joining the race for the builder due to the nature of the construction industry, which is highly dependent on real estate cycles, industry watchers said. Managing a construction company also requires staff with relevant expertise as well as knowhow about building materials, which is another factor that could make financial investors shun the company.

But some financial investors, in particular those specializing in corporate restructuring or investments in non-performing loans, are reportedly showing interest in buying Doosan E&C. They, however, are seeing a partnership with a strategic investor as a prerequisite to their investment in the builder, with some of them already tapping possible strategic partners.

Some market observers are noting Keystone Private Equity’s 2016 acquisition of Dongbu Corporation as a reference case. Not only financial investors but strategic investors, including Hoban Construction and Seoyoung Engineering, joined the bidding war for the bankrupt builder, but Keystone PE finally became the winning bidder.

Keystone PE was able to bet on Dongbu Corporation because Korea Real Estate Investment & Trust (KOREIT), the PE firm’s strategic partner, had its back. At the time, Keystone PE teamed up with Echo Prime PE to jointly manage a fund dedicated to buying the builder, and KOREIT committed 70 billion won to the fund.

After acquired by Keystone PE, Dongbu Corporation participated in several development projects led by KOREIT. It succeeded in turning around its finances in the first year of the acquisition, with an annual average operating income of 37.6 billion won over the past three years. Keystone PE’s investment in Dongbu Corporation reportedly generated an internal rate of return of 17.6 percent.

“Doosan Group’s self-rescue plans, which will be submitted soon to the conglomerate’s creditors, will have a large impact on a potential bidding war for Doosan E&C,” an investment banking industry source said. “Especially, Doosan E&C’s debt issues are expected to be a key factor in a planned sale of the company.”

According to credit rating agencies, Doosan E&C is estimated to have about 300 billion won of contingent liabilities in relation to project financing.

(By reporter Kim Byung-yoon)