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South Korea Starts Daewoo Shipbuilding Sale

South Korea will start the sale process for Daewoo Shipbuilding and Marine Engineering, the world's No. 3 shipbuilder, by putting up for sale a 50.4 percent stake currently worth $3.6 billion.

State-run Korea Development Bank (KDB), Daewoo's top shareholder, said in a statement on Wednesday it would name lead managers for the sale and put the company up for auction, but did not provide any detailed timeframe.

State institutions own 50.4 percent of Daewoo, with KDB holding 31.3 percent and Korea Asset Management Corp another 19.1 percent.

"KDB decided to start the sale process to recover investment funds in a timely manner and to transfer Daewoo's management to a responsible investor who can contribute to the company's long-term development," the bank said.

Daewoo Shipbuilding shares jumped over 10 percent in morning trade.

Energy and construction-focused GS Group and the South Korean state pension fund have expressed interest in Daewoo Shipbuilding.

A sale to foreign shipbuilders is seen less likely as Daewoo also operates a defense business, but the deal could still attract foreign financial investors who may join a local bidders' consortia, analysts said.

Anti-trust issues are likely to block major domestic rivals such as Hyundai Heavy Industries and Samsung Heavy Industries, the world's biggest and second-biggest shipbuilder, from bidding for Daewoo.

KDB's announcement comes at a time when South Korea has unveiled plans to privatize the state-run bank, which would require speedy disposal of its stakes in debtor firms such as Daewoo and Hyundai Engineering & Construction.