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Doosan Bobcat delays its IPO

All News 09:15 October 10, 2016

SEOUL, Oct. 10 (Yonhap) -- Doosan Bobcat Inc., a unit of power and construction equipment conglomerate Doosan, said Monday it has decided to push back its planned initial public offering (IPO) on the local stock market due to lukewarm market response.

In August, the company received preliminary approval for its IPO planned for Oct. 21.

"Given unfavorable market conditions, we will retry the IPO later in the near future," said the company in a regulatory filing.

Doosan has offered a price band of between 40,100 won (US$36) and 50,000 won for the IPO, and has been expected to raise up to 2.45 trillion won if the price is set at the upper limit.

Doosan Bobcat delays its IPO - 1

It would become the country's second-biggest market debut since Samsung Life Insurance Co.'s 4.89 trillion won in 2010.

But industry sources said institutional investors think Doosan Bobcat is overvalued compared with its earnings and rivals' market capitalization, meaning the IPO price band should be lowered.

They said Doosan Bobcat's market debut may take place in November or January next year.

Doosan Infracore Co. and Doosan Engine Co. own a majority 78.4 percent stake in Doosan Bobcat, which operates 31 subsidiaries in 20 countries. Doosan Bobcat is a leading player in the small construction machinery sector in the United States.

The IPO plan is part of Doosan Group's efforts to improve its financial status. The power-to-construction equipment conglomerate has raised trillions of won by selling assets in recent years to survive a prolonged slump in the construction industry.

Doosan Group hopes its debt will be reduced to 8 trillion won from the 11 trillion won recorded at the end of last year with the proceeds from the IPO.

Doosan Bobcat's major products include a compact track loader and a mini excavator, whose market shares top the North American market.

Doosan Bobcat has seen sharp growth in the past few years.

Last year, Doosan Bobcat posted an operating income of 386 billion won on sales of 4.04 trillion won.

In the first half of the year, Doosan Bobcat logged an operating income of 235 billion won on sales of 2.15 trillion won.

Doosan Bobcat said it seeks to expand its presence in China with market-tailored construction equipment.

In 2007, Doosan Infracore acquired Bobcat and other construction equipment units from North Carolina-based Ingersoll Rand PLC for $4.9 billion.

JP Morgan and Korea Investment & Securities Co. are the lead managers for the IPO.

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