이 기사는 2019년 11월 15일 08:00 thebell 에 표출된 기사입니다.

As Hong Kong-based private equity firm Baring Private Equity Asia (BPEA) accelerates the sale of South Korea's parcel delivery firm Logen Logistics, the market is paying attention to the popularity of the deal.

According to mergers and acquisitions (M&A) industry sources on November 11, BPEA and the lead manager Citigroup Global Markets have contacted potential buyers to gauge demands for the company. The lead manager hasn't sent out documents that contain detailed information on the target company yet, but several strategic investors and large private equity (PE) firms have already showed their interests.

Market watchers say large PE firms with high levels of dry power in their blind funds are reviewing the target company amid lack of big ticket deals in the market. Considering a boom in South Korean delivery industry along with the expansion of the e-commerce market, the delivery industry is worth reviewing the investment.

South Korea's parcel delivery industry has grown rapidly amid burgeoning domestic e-commerce market. According to Statistics Korea last year, the total value of online shopping transactions has grown by 20 percent per year over the past five years. As the industry is anticipated to continue its uptrend, Logen is likely to see strong interests.

The country's delivery firms have posted upbeat earnings results on the back of service charge hikes this year. South Korea's biggest parcel delivery service provider CJ Logistics hiked its service charge in package delivery business in the second quarter for the first time in 27 years. The company delivered a positive earnings surprise in the third quarter. Hanjin Express, which also hiked its service charge by around three percent, also saw its logistics volume increase by 17 percent. External factors like service charge hike can be one of the variables in measuring Logen's enterprise value.

Logen has specialty in Consumer to Consumer (C2C) business with higher profits. As of the end of last year, Logen recorded sales of 371.7 billion won, operating profit of 20.7 billion won, operating profit margin of 5.5 percent. CJ Logistics recorded operating profit margin of 1.8 percent last year. Hanjin Express posted 2.1 percent. Lotte Global Logistics recorded a loss of 17.8 billion won over the same period.

Major firms have already reshaped domestic parcel delivery industry. Logen has survived with economies of scale and stably run its business. It is the fifth largest firm in the domestic logistics market with market share of around seven percent, being in tight competition with Korea Post's Logistics. Financial investors may find the company attractive given its steady cash generating capacity.

Strategic investors who seek to expand their e-commerce businesses can expect synergies by acquiring parcel delivery firms. Retail giants including Shinsegae Group have competitively enhanced their e-commerce businesses. Coupang, the nation's number one e-commerce company, has set a positive precedent for creating own delivery system

Views on the company's asset-light business model and the fact that C2C parcels account for 80 percent of total logistics volume can differ among strategic investors. An absence of real estate asset can be a weak point but at the same time it can appeal to some strategic investors who prefer the asset-light model.

(By reporter Kim Hye-ran)