Machine tool maker DN Solutions kicks off IPO process

DN Solutions Co., the world’s third-largest machine tool maker, has kicked off the process of going public on the Korea Exchange, in a planned initial public offering valued at around 3 trillion-4 trillion won ($2.2 billion-2.9 billion).

The South Korean machine tool company, formerly Doosan Machinery Tools, recently hired Samsung Securities Co., Mirae Asset Securities Co. and UBS as its IPO lead managers, according to people with knowledge of the matter on Thursday.

Korea Investment & Securities Co. and Bank of America joined the list of the bookrunners.  

Details on the timeframe and breakdown of institutional and retail investors of the offering will be determined based on the conditions of the industry and stock market.

In 2022, DN Automotive Co., a South Korean automotive parts manufacturer, acquired 100% of DN Solutions for 2.12 trillion won from MBK Partners.

It financed the purchase with 900 billion won in equity capital; 1 trillion won in acquisition financing; and 220 billion won in funding from Korea Investment Private Equity and other sponsors.

The sources said that DN Solutions will likely debut on the Korea Exchange by the end of this year to fulfill its parent company's promise to financial investors that the IPO will be completed by January next year to facilitate their exits.

Earlier this month, DN Solutions raised 83.3 billion won in a rights offering through the state-owned Korea Development Bank and Seoul-based STIC Investments Inc., according to its regulatory filing.

The rights issue cut its parent company’s stake to 90.32%.

DN Solutions boasts a diverse portfolio of about 500 types of machine tools, ranging from turning centers to machining centers and boring mills. They are supplied to automotive, aviation, medical and semiconductor companies. It derives the majority of its earnings from exports.

In 2023, its operating profit jumped 19% to 391.4 billion won from the previous year’s 328.1 billion won. Sales remained steady at 1.8 trillion won.

Its earnings before interest, tax, depreciation and amortization climbed 40% to 241.7 billion won as of the end of June 2023, compared to the year-earlier period. 

In January, DN Solutions announced that it had purchased a stake in German software developer ModuleWorks for an undisclosed sum in a strategic investment.

Write to Seok-Cheol Choi at dolsoi@hankyung.com

Yeonhee Kim edited this article.