2020.07.11(토)

전체기사

A big year for homegrown IMM PE South Korea's PE firm actively made investments and exits while some problems remain

Translated by Kim So-in 공개 2019-12-16 08:00:00

이 기사는 2019년 12월 16일 08:00 더벨 유료페이지에 표출된 기사입니다.

It has been a big year for South Korea's homegrown private equity (PE) firm, IMM Private Equity (PE). The firm has actively made investments and exits throughout the year and the launch of the largest blind fund in the firm’s history is around the corner.

IMM PE’s investment portfolio has a wide range of sectors, including manufacturing, food and beverage (F&B), shipping, contents, and e-commerce. The market assesses the firm shows great chemistry among partners - Song In-jun, chief executive officer (CEO) of IMM PE, Kim Young-ho, Lee Hae-joon and Song Dong-han to make the deal process smooth.

There are many accomplishments throughout the year. IMM PE has concentrated in investments in the first half of this year. In April, the firm had a tight race with Macquarie Private Equity to buy industrial gas company AirFirst (former Linde Korea) at 1.3 trillion won. With the firm winning the deal, the market assesses IMM PE has competitiveness in both private deal and public auction. IMM PE has managed to enter the industrial gas market which has a high entrance barrier, using its two funds, Rose Gold III and Rose Gold IV. This one-trillion-size deal was the largest in the firm’s history.

In October, the PE firm signed a stock purchase agreement (SPA) to sell Tailim Packaging and its subsidiary Tailim Paper to Sae-A Trading for 730 billion won. Considering the acquisition loans and dividends, it is said that IMM PE generated a 2.3x return on capital invested in Tailim Packaging. In July 2015, IMM PE purchased shares of Tailim Packaging and Tailim Paper for a total of 349 billion won. Back then, IMM PE's two blind funds, RoseGold II and RoseGold III invested 160 billion won and 120 billion won, respectively in the Trinity One, a special purpose company that IMM PE established. The remaining 70 billion won was financed through an acquisition loan. The transaction is expected to be completed in January 2020 and an internal rate of return (IRR) is likely to be 22.3 percent.

The industry experts say the PE firm's exit from Tailim Packaging is quite meaningful due to its size. Although a sale of domestic windshield wiper maker CAP in 2017 was IMM PE's first exit of buyout investment, the latest deal is considered to be more important, as the deal size of CAP was only 42 billion won. IMM PE also exited Tbroad in the first half of this year.

In contrast, Taihan Electric Wire, Hollys F&B, SoCar are IMM PE’s big headaches. The firm is having difficulties in finding potential buyers for Taihan Electric Wire and Hollys F&B. South Korea’s car-sharing company SoCar is facing challenges after a South Korean lawmaker proposed a bill designed to ban new mobility businesses by platform companies.

IMM PE purchased a 67.14 percent stake in the country's No.2 cable maker Taihan Electric Wire at 300 billion won in 2015 via its second flagship fund. The firm currently holds 61.3 percent stake in the cable maker. In the meanwhile, South Korean government is moving to put the brakes on the planned sale of Taihan to a Chinese firm as the trade ministry designated the cable maker's technologies as national core technology in June. Among domestic strategic investors, LS Cable & System is mentioned as a potential buyer of Taihan Electric Wire, but market says the possibility is low due to monopoly or oligopoly problems.

IMM PE has renewed search for a buyer for Hollys F&B, after it tried to sell its majority stake in the coffee chain operator three years ago. Back then, the PE firm hired Deutsche Bank to lead the sale and negotiated with two potential buyers abroad but the attempt flopped due to price differences. Since last year, UBS has been acting as a lead sale manager and is now contacting potential buyers, but it is reportedly drawing lukewarm interest.

SoCar, a parent company of VCNC that operates rental van-hailing service Tada, has been at the center of a heated debate over the legality of the business model after prosecutors indicted SoCar CEO and VCNC CEO without detention for running an "illegal" service. IMM PE owns a 9.9 percent stake in SoCar, which makes the PE firm its fifth-largest shareholder. IMM PE invested 60 billion won in the car-sharing company in April 2018.

There are some more problems to be solved next year. A consortium including IMM PE and Hong Kong-based Affinity Equity Partners (AEP) submitted an application for arbitration against Kyobo Life Insurance Chairman and CEO Shin Chang-jae with the International Chamber of Commerce (ICC) last year to exercise the put option, since the insurer has yet to go public after years of delay. ICC is expected to make decisions by the end of next year.

To improve business performance of Able C&C has been the PE firm’s long-pending problem. Able C&C, the cosmetics company that operates the Missha brand, turned into an operating loss of 17.3 billion won last year. The cosmetic company has focused on overseas markets, opening stores in Ukraine and Iraq. IMM PE invested in the company through its third flagship fund in 2017.

(By reporter Rho Arrum)
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