S.Korea pension fund may skip Daewoo shipyard bid
South Korea's national pension fund may not proceed with a planned bid for Daewoo Shipbuilding and Marine Engineering as global turmoil dents potential returns from the deal, an official said on Tuesday.
The National Pension Service (NPS), the world's fifth-largest pension fund, had planned to team up with one of the bidders for the world's No. 3 shipyard, which include POSCO , energy and construction-focused GS Group, and Hanwha Group.
The deal, managed by state-owned Korea Development Bank, was initially estimated to fetch as much as 8 trillion won ($6.8 billion) when it was announced in August, with a preferred buyer set to be picked next month.
"Considering all circumstances, the relative merit of investing in Daewoo Shipbuilding has dwindled sharply from two months ago," an NPS official said, asking not to be named because the fund has not yet finalised its position on the Daewoo auction.
"We are considering not participating in the Daewoo Shipbuilding deal."
Financial markets have been pounded by a global credit crisis since the deal was announced, heightening fears the turmoil will cause lasting damage to the world economy. The Baltic Dry index .BADI, which measures changes in the cost of shipping commodities, has fallen by more than two-thirds in the past four months.
The official added that it was also difficult to choose which of the three bidders to partner with.
It would make a decision on its stance soon.
NPS had expected the Daewoo Shipbuilding sale to fetch a handsome return as strategic buyers were keen to draw in the pension fund, which previously said it could contribute up to 1.5 trillion won to the Daewoo deal.By comparision, domestic banks have been ordered to restrain acquisition-related lending amid the global financial crisis.
Hyundai Heavy Industries , the world's top shipbuilder, handed in a preliminary bid for 50.4 percent of Daewoo Shipbuilding in early September, saying it would go it alone in the auction, without forming a consortium.
Shares in Daewoo Shipbuilding fell 5 percent to 28,250 won by 0236 GMT, underperforming a 2.7 percent in the wider market .
The National Pension Service (NPS), the world's fifth-largest pension fund, had planned to team up with one of the bidders for the world's No. 3 shipyard, which include POSCO , energy and construction-focused GS Group, and Hanwha Group.
The deal, managed by state-owned Korea Development Bank, was initially estimated to fetch as much as 8 trillion won ($6.8 billion) when it was announced in August, with a preferred buyer set to be picked next month.
"Considering all circumstances, the relative merit of investing in Daewoo Shipbuilding has dwindled sharply from two months ago," an NPS official said, asking not to be named because the fund has not yet finalised its position on the Daewoo auction.
"We are considering not participating in the Daewoo Shipbuilding deal."
Financial markets have been pounded by a global credit crisis since the deal was announced, heightening fears the turmoil will cause lasting damage to the world economy. The Baltic Dry index .BADI, which measures changes in the cost of shipping commodities, has fallen by more than two-thirds in the past four months.
The official added that it was also difficult to choose which of the three bidders to partner with.
It would make a decision on its stance soon.
NPS had expected the Daewoo Shipbuilding sale to fetch a handsome return as strategic buyers were keen to draw in the pension fund, which previously said it could contribute up to 1.5 trillion won to the Daewoo deal.By comparision, domestic banks have been ordered to restrain acquisition-related lending amid the global financial crisis.
Hyundai Heavy Industries , the world's top shipbuilder, handed in a preliminary bid for 50.4 percent of Daewoo Shipbuilding in early September, saying it would go it alone in the auction, without forming a consortium.
Shares in Daewoo Shipbuilding fell 5 percent to 28,250 won by 0236 GMT, underperforming a 2.7 percent in the wider market .