이 기사는 2020년 01월 03일 08:00 thebell 에 표출된 기사입니다.

A lack of large deals led to a decrease in South Korea’s M&A volume in 2019, despite an increase in deal count. It is reassuring, though, that deal-making activity picked up in the fourth quarter.

The number of M&A deals in South Korea totaled 438 in 2019, up by 56 compared to 2018, according to figures from the bell’s league tables. The value of M&A, though, decreased about 10 percent year-on-year to roughly 53 trillion won ($46 billion) due to a lack of large deals. the bell's league tables are compiled based on deals that have completed.

Several trillion-won-size deals closed last year. These included KCC-led consortium's acquisition of U.S.-based Momentive Performance Materials; Shinhan Financial Group's purchase of Orange Life Insurance; CJ CheilJedang’s acquisition of U.S. food business Schwan's Company; Woongjin Group’s repurchase of Woongjin Coway; MBK Partners’ acquisition of Lotte Card. But there were no deals that matched Toshiba’s $18 billion sale of its memory chip business in 2018 to a Bain Capital-led consortium that included South Korean chipmaker SK Hynix.

However, it is reassuring that M&A activity showed signs of recovery. After a slump in the third quarter, deal-making rebounded in the fourth quarter, increasing more than 80 percent to about 15 trillion won ($13 billion).

Meanwhile, cross-border deals accounted for about 28 percent of the M&A volume in 2019, of which outbound and inbound deals constituted 15 percent and 13 percent, respectively.

Private equity firms dominates

The domestic M&A market continued to be dominated by large private equity firms in 2019. Among others, MBK Partners, the largest private equity firm in the country by assets under management, showed a strong presence throughout the year.

One of the most successful exits by MBK Partners is the $2 billion (2.3 trillion won) sale of a 59.15 percent stake in Orange Life Insurance (formerly ING Life Insurance) to Shinhan Financial Group, which was completed last February. Prior to the sale, MBK Partners had made partial exits through two rounds of recapitalization and an initial public offering.

MBK Partners also sold a 22.17 percent stake in Woongjin Coway to Woongjin Group’s education service unit Woongjin Thinkbig for 1.685 trillion won ($1.45 billion) in a deal that completed last March. Like its exit from Orange Life Insurance, the private equity firm locked in gains throughout its investment period by selling a partial stake in Coway through three rounds of recapitalization as well as two block trades. Both Orange Life and Coway deals were included in the top 10 deals in 2019.

In the second half of 2019, MBK Partners entered into an agreement to sell the entire stake in Daesung Industrial Gases to Macquarie Group for more than 2.5 billion won ($2.12 billion), almost double the amount at which the firm acquired the gas company two and a half years ago. The transaction is expected to complete in 2020.

Hahn & Company, another leading private equity firm based in Seoul, completed the $231 million (260 billion won) sale of its entire stake in Woongjin Foods to Taiwanese food giant Uni-President Enterprises Corp. last year. The deal value was more than double the price at which Hahn & Co. acquired the food maker from Woongjin Holdings in 2013.

A mixed fate for advisory firms

Kim & Chang continued to be far ahead of other legal advisory firms in the domestic M&A market in 2019, taking more than 22 percent of the adjusted market share, the mean of market shares in deal value and count. Bae, Kim & Lee ranked a distant second with about 13 percent of the adjusted market share. Meanwhile, Shin & Kim secured the fourth position, working on several big deals in 2019 with Managing Partner Kim Doo-sik returning to the law firm.

Goldman Sachs surprisingly topped Korean M&A financial advisors’ league table for 2019, a big jump from its 22nd position in 2018. It was the first time that Goldman Sachs topped Korea’s league table since data began to be compiled by the bell in 2010. Morgan Stanley came to second.

Meanwhile, Deloitte Anjin secured the top position in the 2019 league table for accounting advisory, with more than 27 percent of the adjusted market share. EY Han Young, which took the first position in 2018, dropped to fourth due to a smaller number of transactions on which it advised.

(By reporter Kim Byung-yoon)