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UPDATE 2-S.Korea's Doosan Bobcat to trim IPO plans after valuation miss
October 10, 2016 / 4:03 AM / in 10 months

UPDATE 2-S.Korea's Doosan Bobcat to trim IPO plans after valuation miss

3 Min Read

* Was to be S.Korea's 2nd-largest listing at top of range

* Offering size too big, price high compared to S.Korean peers-sources

* S.Korea expects other big-ticket IPOs by early next year (Recasts, adds investor views, background)

By Joyce Lee

SEOUL, Oct 10 (Reuters) - South Korea's Doosan Bobcat Inc on Monday cancelled plans for an up to 2.45 trillion won ($2.2 billion) initial public offering after the valuation fell short of its targets, and is expected to relaunch a smaller IPO within days.

The construction equipment maker would submit a new IPO plan with a view to listing as soon as next month, a spokesman for parent company and largest shareholder Doosan Infracore Co Ltd said.

The troubled offering could prompt rethinks about the valuations of other big-ticket South Korean IPOs in the works, such as Samsung BioLogics Co Ltd's up to $2 billion planned offering or that of the country's largest mobile games company, Netmarble Games Corp.

"The market appears to have felt the size of the offering was too big for it to handle, and some other conditions did not meet market expectations," the Doosan Infracore spokesman said.

Doosan Infracore shares slumped as much as 13 percent to their lowest intraday level in over 3 months on Monday after the news.

Doosan Bobcat sees strong potential for its main market of North American housing but investors thought its IPO was too expensive compared with South Korean peers, two Seoul-based institutional investors told Reuters, declining to be identified as they were not authorised to speak to media.

Both people said they had submitted a price below the preliminary pricing range of 41,000-50,000 won per share during last week's bookbuilding.

At the top of the range it could have been South Korea's second-largest listing ever.

Doosan Bobcat set its preliminary pricing range by comparing with global peers such as Caterpillar Inc and Komatsu Ltd.

"We have conducted a bookbuilding to determine the final IPO price but decided to postpone the IPO considering conditions such as the difficulty of receiving an adequate evaluation of the company's value," it said in a filing earlier on Monday.

Doosan Bobcat has North America's largest market share for small construction equipment such as skid-steer loaders. It has 31 subsidiaries in 20 countries, and reported sales of 4.04 trillion won and net profit of 148 billion won in 2015.

Doosan Infracore said earlier this year favourable conditions in the North American housing construction market accelerated the listing plan.

The IPO proceeds are earmarked to pay off Doosan Infracore debts.

Under South Korean exchange rules, Doosan Bobcat has until February 2017 to list or start the process over.

Doosan Infracore and affiliate Doosan Engine Co Ltd currently own a combined 78 percent stake in Doosan Bobcat.

$1 = 1,114.7500 won Reporting by Joyce Lee; Editing by Diane Craft and Stephen Coates

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