Domestic Native PE's Role in the M&A Market Grows

eBay Korea, Namyang Dairy Participate in Acquisition Battle
Hard to Find M&A Without Their Involvement

[Asia Economy Reporter Lim Jeong-su] Han & Company, a domestic native private equity (PE) firm, is drawing attention for its role in mergers and acquisitions (M&A) of large corporations as it acquired the controlling stake of Namyang Dairy Products, which faced issues due to the Bulgari controversy. In the past, large corporations traded companies among themselves, such as the Samsung-Hanwha Group big deal, but recently, PE participation in major M&A transactions has become more prominent.

As the number of domestic PEs has increased exponentially and PE assets under management (AUM) have grown to as much as 100 trillion won, it has become rare to find M&A deals without PE involvement.

In the recent acquisition battle for eBay Korea, MBK Partners participated alongside large corporations such as Shinsegae and Lotte, attracting attention. It is also a point of interest which large corporation MBK, with its financial power, will partner with for a joint acquisition. MBK recently participated in K Bank's capital increase, positioning itself as a major shareholder of Korea's leading internet bank.

MBK is a PE firm established in 2005 by Kim Byung-joo, the youngest son-in-law of the late Park Tae-joon, former chairman of POSCO. Since then, MBK has expanded its size by acquiring Hanmi Capital, Ssangyong Capital, HK Savings Bank, C&M, and KT Rental. It also acquired Woongjin Coway and domestic outdoor brand Nepa.

In 2015, MBK attracted attention by purchasing 100% of Homeplus shares from Tesco in the UK for about 7.2 trillion won, together with the Canada Pension Plan Investment Board and Singapore's sovereign wealth fund Temasek.

Besides MBK, IMM PE and Han & Company are considered representative domestic PEs. IMM PE recently invested in Hollys Coffee, Kyobo Life Insurance, Handok, POSCO Specialty Steel, and T-Broad Holdings. Han & Company holds major companies such as Namyang Dairy Products, Ssangyong Cement, and Hanon Systems.

Cases of domestic native PEs acquiring overseas companies are also gradually increasing. Centroide PE, a newly established domestic PE, agreed last month to acquire TaylorMade, one of the world's top three golf equipment companies, for about 2 trillion won.

An industry insider said, "As capital strength and fundraising capabilities have strengthened, native PEs are actively participating in domestic and overseas corporate M&A," adding, "Due to controversies over foreign PEs' 'eat-and-run' practices, the role of domestic native PEs is gradually being reinforced."