KDB PE fund to take control of Kumho Asiana engineering unit for W3trn

A private equity fund managed by Korea Development Bank (KDB) is to acquire a more than 50 percent stake in Daewoo Engineering and Construction, a Kumho Asiana Group unit, for about W3 trillion ($2.6 billion; €1.8 billion), Kim Jae Ik, KDB’s deputy head of private equity, told PEI Asia.

Kim declined to disclose more details about the private equity fund and the transaction. 

The sale is part of the Korean conglomerate’s efforts to pay down debt obligations stemming from its 2006 purchase of a 72 percent stake in the same company for KRW6.43 trillion.

KDB, Kumho Asiana’s lead creditor, is also in the process of setting up another private equity fund to acquire Kumho Life Insurance, another Kumho Asiana unit. The state lender is currently targeting investors in Korea and abroad for the fund. The fund will be co-managed by Korean fund manager Consus Asset Management when it has been raised, Kim added. 

In early 2009, KDB launched a turnaround fund targeting commitments of W1 trillion. The fund had garnered W100 billion by June 2009, when it acquired an 80 percent stake for W40 billion in sewing machine maker Sunstar Precision, a KDB spokesman said at the time. This fund seeks to acquire controlling stakes in distressed small- and medium-sized enterprises. It will hold these stakes for two to three years, attempting to turn the companies before selling them back either to previous owners or to members of the existing management.

Formed in 1954, KDB often acquires stakes in domestic companies with liquidity problems in an attempt to restructure them and sell them later.

In December 2009, North Asia-focused buyout firm MBK Partners and Korean telecommunication company KT were selected as the preferred bidders for Kumho Rent-A-Car, Kumho Asiana’s car rental unit, a source close to the deal confirmed to PEI Asia.

Kumho Asiana has interests in diverse industries such as automotives, airlines, airport services, chemicals, logistics, financial services, trading and hospitality.

Daewoo Engineering & Construction is a general engineering constructor. Its projects include residential and commercial buildings, public facilities, schools, hospitals and infrastructure works such as highways, ports, tunnels, railways, dams and power plants.