Private equity firms buys shipbuilder Daehan for $150 mn

A South Korean private equity consortium has acquired Daehan Shipbuilding Co., a small-size oil tanker manufacturer, for around 200 billion won ($150 million) from a state-run lender, the company said on Wednesday.

The three-way consortium led by Seoul-based KH Investment Inc. (KHI) completed the purchase of a 95% stake in unlisted Daehan Shipbuilding from the Korea Development Bank (KDB).

The consortium, including Korea Investment Private Equity and SG Private Equity, was chosen as a stalking horse bidder after offering the highest price among the initial bidders. It paid a deposit worth 10% the proposed acquisition price in May of this year.

As the sale process proceeded, it raised its bid price from 180 billion won to the 200 billion won range to beat other candidates. It also priced in record-breaking shipbuilding orders that boosted the shipbuilder’s earnings as the industry recovered from a decade-long downturn.

The KHI-led consortium will manage the shipbuilder as a strategic buyer.

Daehan specializes in building oil tankers and petrochemical product carriers. Its shipyard is located in Haenam, on the southernmost tip of the Korean Peninsula and 300 km southwest of Seoul.

It came under creditor-led protection after its construction-focused parent group went under in 2009.

SYNERGY WITH ANOTHER KOREAN SHIPBUILDER

The deal followed KHI’s 250-billion-won purchase of debt-laden STX Offshore & Marine Co., now renamed K Shipbuilding, last year. For the acquisition, it formed a consortium with UAMCO Ltd., a bad bank co-owned by eight Korean banks, ending a seven-year court receivership of then STX Offshore.

The KHI-led consortium hopes to create synergy through business cooperation between the two shipbuilders, which would improve operating efficiency and cut operating prices.

Daehan was one of the two remaining shipbuilders owned by KDB, after the state-run bank took over debt-ridden shipbuilders following the 2007-08 global financial crisis.

Last year, KDB sold Hanjin Heavy Industries Co., currently HJ Shipbuilding & Construction, to Dongbu Corp., a domestic builder.

But its long-planned sale of Daewoo Shipbuilding & Marine Engineering Co., collapsed early this year, after the European Commission vetoed the proposed merger between the world’s No. 2 shipbuilder and its bigger rival Hyundai Heavy Industries Co.

Write to Ji-Hye Min at spop@hankyung.com
Yeonhee Kim edited this article.