South Korea pension fund set to scrap plan to bid for shipyard
South Korea's state pension fund is likely to scrap plans to bid for a major local shipyard because of global financial turbulence, one of its fund managers said Thursday.
The National Pension Service the world's fifth largest, had been in talks with POSCO, GS Group and Hanwha Group to find a partner for the acquisition of Daewoo Shipbuilding.
Hyundai Heavy Industries, the world's largest shipyard, is also interested in Daewoo Shipbuilding, the world's third biggest yard "We have held our plan. Although our official position will be announced next week, the fund is highly likely to find a different source for investment," the fund manager told.
"The shipyard is less attractive than two months ago because the market situation has changed rapidly."
The pension fund, with assets of 228 trillion won (187 billion dollars), has posted a negative return so far this year due to the financial turmoil.
State-run Korea Development Bank and a government asset-management unit are selling a 50.4 percent stake in Daewoo Shipbuilding, a deal newspapers said will fetch as much as seven trillion won.
They had taken over Daewoo Shipbuilding in 2000 after its parent Daewoo Group collapsed under a debt mountain totalling 82 billion dollars -- one of the world's largest corporate failures.
But Daewoo Shipbuilding has a lucrative energy-related business and strong cash flows. Last year its sales climbed 32 percent year-on-year to 7.1 trillion won.
South Korea, home to seven of the world's top 10 shipyards, secured record orders last year and this year because of strong demand for crude carriers and offshore exploration equipment amid high oil prices.