Korean PE Fund Strikes $1.9B Deal for Daewoo Egineering

A buyout fund run by Korea Development Bank has agreed to pay $1.9 billion for a controlling stake in Daewoo Engineering & Construction, Reuters reported. The Seoul-based fund will buy 37.16% of Daewoo from investors who held an option to sell the stake back to the cash-strapped Kumbo Asiana Group at a price much higher that current market value, Reuters said. Korea Development Bank is the lead creditor for Kumbo.

(Reuters) – A private equity fund held by state-run Korea Development Bank signed a $1.9 billion deal to buy a controlling stake in Daewoo Engineering & Construction to help the restructuring of its cash-strapped parent group, the bank said on Monday.

KDB, the lead creditor for Kumho Asiana Group, bought 37.16 percent of Daewoo for 2.2 trillion won ($1.9 billion), or 18,000 won a share, from its financial investors who held an option to sell their stake back to Kumho group firms at a sharply higher price than the current market value.

“The deal will help support restructuring of Kumho group … and help stabilise financial markets,” KDB said in a statement.

Kumho Asiana, South Korea’s eighth-biggest business group by assets, purchased Daewoo in 2006 but its acquisition sprees, including Daewoo and Korea Express, later forced the group into liquidity problems late last year. ($1=1143.0 Won) (Reporting by Miyoung Kim; Editing by Jacqueline Wong)