In a woeful environment for IPOs in Asia, it would be nice if the ones that did reach the market were done properly. October brought a mishandled IPO in South Korea that should instead have set a positive tone for several big equity fundraisings due in that country.
Doosan Bobcat’s IPO is a knock-on effect of chaebol restructuring, a theme Euromoney will report on in more detail next month. There are two parallel themes here: a healthy chaebol like Samsung (exploding phones notwithstanding) which is trying to reorganize in order to focus on core businesses; and groups like Doosan that have to sell because of financial pressures.
It was perhaps a failure to recognize how heavily Doosan falls into the second camp – and how well aware of that investors are – that derailed its opening attempt at this deal. Its IPO represents a sell-down by two other members of the chaebol (Doosan Infracore and Doosan Engine) and by several private equity funds of their stakes in the farming and construction equipment manufacturer.
They set out with guidance of W41,000 ($35.83) to W50,000 a share, reflecting Doosan senior’s urgent need for cash. Investors saw their desperation and stayed away. The deal was repriced to W35,000 and still failed to clear the market. It is due to come back for another go in November, with pricing now believed to be in the W29,000 to W33,000 range – a long way from the original guidance.
In Seoul, there is plenty of sniping, both among the international leads (Credit Suisse, JPMorgan, HSBC) and between the internationals and the local houses (Hanwha Investment & Securities, Korea Investment & Securities and Shinyoung Securities), with talk of miscommunication and lack of coordination.
It will probably get away second time around at more realistic guidance, but it’s not ideal in a skittish and difficult market. As Euromoney went to press, Samsung BioLogics was on the point of launching a bigger deal, of around $2 billion, with three joint leads in common, as it happens – and it would have been helpful if it had been able to follow a successful float.
Doosan Bobcat, in turn, was following Hotel Lotte’s axed float, which was postponed after criminal charges were filed against the Lotte chaebol’s chairman and other family members for tax evasion and embezzlement.
Nothing is simple in the tangled world of chaebol assets and ownership, but reading market demand ought to be one of the easier tasks.