Financial authorities are poised to put the state-funded Daewoo Shipbuilding & Marine Engineering up for auction, following their recent policy to privatize Woori Financial Group.
To recoup taxpayers’ money injected into Daewoo Shipbuilding, the Financial Services Commission has launched a process to sell its 17.1 percent stake in the company, regulatory officials at the FSC said Sunday.
According to officials, the FSC’s initial goal is to reduce the government’s shares in the shipbuilding giant before it launches the bidding procedures.
“After retrieving some public funds, the FSC later is expected to seek further disposal of the 31.3 percent stake held by the state-controlled Korea Development Bank in Daewoo Shipbuilding,” said an official.
He added the authorities are vitalizing the stalled sales process for taxpayer-money-injected enterprises under new FSC chairman Shin Je-yoon.
The sale plan comes as the shipbuilding industry has suffered a sharp drop in orders in overseas markets in the wake of the global economic slowdown over the past few years.
Korean shipbuilders have faced rising competition from Chinese firms armed with cheaper prices in the commercial shipbuilding sector. They have responded by shifting their business focus to high-value-added ships like LNG tankers in commercial shipbuilding or offshore plants.
“Apart from the willingness of the FSC, whenever uncertainties linger in a particular industry, more ailing companies usually enter the merger and acquisition market,” said a research analyst.
But he pointed to an imbalance between supply and demand in the M&A market in the near future, stressing that potential investors do not have sufficient capacity to focus on M&A targets amid prevailing cash flow problems.
Market insiders share the view that the successful sale ― involving the retrieval of public funds via desirable bidding prices ― of Daewoo Shipbuilding depends upon the recovery in the sagging shipbuilding industry and global economy.
Some brokerage houses, however, started to paint a rosy picture. Daishin Securities predicted that the shipbuilding industry will have a better year in 2013 as global shipbuilding financing started to recover.
“The oversupply issue is likely to subside from this year,” said a Daishin Securities analyst.
According to a report of U.K.-based Clarkson’s Research, a late surge in shipbuilding orders helped cement the Korean industry’s global lead in volume last year.
Korea was tied with China in terms of the number of shipbuilding orders in December, with 30 vessels each, but Korean shipbuilders stayed ahead of Chinese in terms of order value.
The report said Korean shipbuilders inked $2.8 billion worth of orders in December, while the value of the Chinese deals stood at $880 million.
This helped Korea keep its lead in 2012, with orders won by Korean shipbuilders totaling $29.9 billion, compared to those of Chinese shipbuilders at $15.4 billion.
By Kim Yon-se (
kys@heraldcorp.com)
