Hyundai Heavy Industries Co. faces a bumpy road in finding a new owner for its brokerage arm HI Investment & Securities Co. that it put up for sale as part of its self-rescue efforts.

According to sources from the investment bank (IB) industry on Friday, Hyundai Heavy Industries and its sale adviser EY Han Young decided to remove the entry deadline for primary bidding after only LIG Investment & Securities Co. has submitted a letter of intention until Friday, the original deadline. A private equity fund (PEF) is also rumored to have officially expressed its intention to take part in the auction.

An official familiar with the sale said the decision to delay preliminary bidding was made not only because of the lack of probable buyers with a strong will but also because of the absence of candidates with enough funds to pay for the stakes up for grabs.

Market watchers initially expected Korea Investment & Securities Co., LIG Investment & Securities and Japan-based Orix Private Equity would participate in the auction. However, Korea Investment & Securities reportedly found the deal would not bring any significant synergy to its own brokerage house, given ongoing restructuring issues and a financial burden. LIG Investment & Securities is also known to be contemplating whether it would go forward with a final auction, according to sources.

Orix Private Equity dropped its plan to buy HI Investment & Securities as the expensive deal value failed to meet its expectations.

Its parent Hyundai Heavy Industries, the nation’s largest shipbuilder that has been financially strapped, officially put its lucrative brokerage unit on the market in late July as part of efforts to improve its financial health.

But having faced difficulties with finding a new owner for the securities firm due to an expensive price tag, Hyundai Heavy even proposed that it may split up shares of its brokerage unit and offer a controlling stake of 50 percent plus one share to expedite the sale process. The shipbuilder originally aimed to sell the 85.32 percent shares of HI Investment & Securities owned by its affiliate Hyundai Mipo Dockyard Co. en block, which it hoped to get fresh funds up to 1 trillion won ($96.2 million). The offer of 50 percent plus one share stake was expected to bring down the sale price to around 500 billion won.

By Kim Hyo-hye

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