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SG PE accelerating to exit investments A private equity firm plans to exit its investments in three portfolio companies

Translated by Kim So-in 공개 2020-04-17 08:00:09

이 기사는 2020년 04월 17일 08:00 더벨 유료페이지에 표출된 기사입니다.

South Korea’s mid-sized private equity firm SG Private Equity (SG PE) is accelerating efforts to exit its investments which were made four years ago.

SG PE is expected to exit at least three companies this year, according to sources familiar with the matter on April 10. What draws strongest attention is the sale of local luxury postpartum care center DeRAMA. It is a rare case in the industry that a PE firm invests in a postpartum care center. SG PE and Plutus Equity Partners launched a 22.5 billion won project fund in 2016 to acquire DeRAMA. They spent nine billion won to acquire old shares from the founder and the remaining 13.5 billion to expand its business in Korea and China.

The postpartum center is known to boast a hotel-like environment and favored by top Korean celebrities. Its premium room is said to cost over 20 million won for a usual two-week stay for mothers to recuperate after giving birth.

Hanmi Pharm is regarded as one of the strongest potential buyers of DeRAMA. Hanmi Pharm invested in the postpartum center as a strategic investor via Ofmom Company. DeRAMA’s establishment in China is called Centre Ofmom. SG PE also invested in Ofmon Company as a financial investor.

SG PE acquired Ofmom Company’s redeemable convertible preference shares (RCPS) worth 25 billion won and convertible bonds worth 25 billion won in 2014. Three years later, the firm exited its investment in convertible bonds with Ofmom Company exercising its call option. SG PE sold RCPS to Ofmom Company’s affiliated company in July 2018 to fully exit its investments. The PE firm’s investment in Ofmom Company recorded an internal rate of return (IRR) of 11.8 percent. For the latest exit, the firm is expected to pursue a strategy similar to that for Ofmom Company.

SG PE is likely to earn a high IRR on its investment in South Korea’s real estate and infrastructure operation & management (O&M) company YIDO. SG PE acquired YIDO’s RCPS and bonds with warrants (BW) for 15.2 billion won in 2016. The firm already exited half the amount via a block deal last year and plans to sell the remaining amount after YIDO’s initial public offering (IPO). If the IPO is delayed, the firm may sell the amount via a block deal again.

YIDO reportedly posted sales of 150 billion won and an operating profit of 18 billion won last year, which increased by more than 60 percent and 150 percent, respectively, compared to a year earlier. YIDO was valued at between 150 billion won and 200 billion won in its pre-IPO funding in 2018. Its current valuation is said to have increased to around 300 billion won, raising hopes for a high IRR.

SG PE is also planning to exit its investment in the country’s IT system integrator ITCen. SG PE acquired convertible bonds of ITCen worth 9.4 billion won by creating a project fund with LX Investment in August 2018. Of the amount, convertible bonds worth around 3.3 billion won were acquired by Bexen Tech on January 9, while the remaining amount was fully converted into new shares at 3498 won a share. Considering the share closed at 5300 won on April 9, the firm is expected to earn around 50 percent returns.

(By reporter Jo Se-hun)
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