SEOUL -- The postponement of Doosan Bobcat's initial public offering of up to 2.45 trillion won ($2.18 billion) is weighing on its parent Doosan Infracore which had hoped to cut its heavy debt with listing proceeds.
Doosan Bobcat, a manufacturer of excavators and loaders, pulled its IPO after marketing shares at 41,000-50,000 won apiece last week.
After it failed to whet investors' appetite, the company was understood to have cut its offering to 35,000 won per share, but even that failed to get the deal off the ground.
Doosan Bobcat's existing shareholders had initially planned to sell 49 million shares, or 48.9% of the company's total share capital. Analysts say that the company's announcement to postpone the deal on Monday is a blow to Doosan Bobcat's major shareholders, Doosan Infracore which owns a 66.5% stake and Doosan Engine with an 11.8% share.
"It is inevitable that investors will cool off on stocks of Doosan group," said Han Young-soo, an analyst at Samsung Securities.
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"Among them, Doosan Infracore will be hit the most as it is the largest shareholder with Bobcat accounting for 74% of its corporate value if the IPO price was set up at the lower band."
Moody's rating agency said that the two companies could have raised between 1.1 trillion won and 1.4 trillion won through the sale of their Bobcat shares during the IPO process which account for about 22% to 26% of the two companies' combined debt respectively.
Shares of Doosan Infracore extended losses by 4.58% to 6,870 won on Tuesday, after falling 7.22 % the previous day.
Doosan Engine shares also continued to fall 4.82% to 3,455 won after a 10.59% plunge on Monday.
If the deal went smoothly, it would have become the largest deal in Seoul's IPO market this year.
The country's IPO market has suffered from a lack of big deals this year with nine companies raising combined 909 billion won on the KOSPI, according to data from the Korea Exchange.
Doosan Bobcat said that it would delay its IPO on the Korea Exchange to either November or January, withdrawing its plan to be listed later this month. A Doosan Bobcat official said that the company would adjust the deal structure and push ahead with the IPO again.
"We decided to postpone the IPO considering market conditions which do not reflect the company's values appropriately," said Doosan Bobcat in a statement.
A source familiar with the deal also said that the company and investors failed to narrow their gaps.
"The company and the investors had different ideas over the IPO price as well as the number of shares," said the source, asking not to be named.
All eyes are now on the IPO of Samsung BioLogics, the drug manufacturing unit of Samsung Group.
BioLogics intends to raise up to 1.9 trillion won from a listing on the KOSPI in November.
"Bobcat doesn't necessarily have a negative impact on Samsung BioLogics," said Lee Jong-woo, head of research at IBK Securities. "Every IPO has its own conditions, so there is no direct relation between the two companies."
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