Doosan Bobcat Inc, a unit of South Korea’s biggest construction equipment maker, withdrew its bid to sell shares in what would have been the country’s biggest initial public offering (IPO) in more than six years amid concerns that the sale price was too high.
The company will withdraw its proposal to raise as much as 2.45 trillion won (US$2.2 billion) and will submit a revised plan soon, Doosan Infracore Co, the biggest shareholder of Doosan Bobcat, said in a regulatory filing in Seoul yesterday.
It expects to list shares next month or in January next year, instead of its earlier planned Oct. 21, the company said in an e-mailed statement.
“There were concerns that the IPO was priced too high and there were too many shares being sold,” said Lee Jae-won, an analyst at Yuanta Securities Korea Co in Seoul. “The stock market has been trading in a narrow range these past few years, so investors are wary about any stock that is offered at what they believe is a high valuation.”
It is the second pull back of an IPO in South Korea, which had the second-worst performance of listings among major Asian bourses. In June, Hotel Lotte Co dropped its 5.26 trillion won offering even after lowering the sale price.
Doosan Infracore fell as much as 13 percent, the biggest intraday drop since August 2011, to 6,720 won and traded at 7,180 won as of 9:18am in Seoul yesterday. Doosan Engine Co, the world’s second-biggest maker of ship engines and a shareholder of Doosan Bobcat, declined as much as 12 percent.
“There were too many shares being offered and a few issues that did not meet market conditions,” Doosan Bobcat said in the statement. “While there was demand, we were unable to come to an accord that satisfied those involved. In that respect, we will relook at the IPO structure, including the number of shares, to fit the market conditions and proceed with the IPO again.”
Shareholders of Doosan Bobcat had offered about 49 million existing shares at 41,000 won to 50,000 won apiece. Doosan Infracore, Doosan Engine Co and other investors planned to sell some of their shareholdings in the IPO.
The Seoul-based company, which got about 70 percent of its sales of 4.04 trillion won last year from North America, has been seeking to expand in emerging markets, including China and Latin America, to generate more growth opportunities.
Korea Investment & Securities Co and JPMorgan Chase & Co are leading the offering. Credit Suisse Group AG, HSBC Holdings PLC, Hanwha Investment & Securities Co and Shinyoung Securities Co are also helping arrange the share sale.
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