BearingPEA Successfully Restructures 674 Billion KRW Acquisition Financing with Acquion Capital and Savings Banks

[Asia Economy Reporter Park Soyeon] Hong Kong-based private equity firm Baring Private Equity Asia (Baring PEA) has completed a recapitalization (recap) worth 674 billion KRW for acquisition financing of Acuon Capital (formerly KT Capital) and Acuon Savings Bank (formerly HK Savings Bank). The strategy involves repaying existing borrowings with new loans and distributing the remaining funds as dividends to recover the investment.

According to the investment industry on the 17th, Baring PEA successfully recapitalized acquisition financing totaling 674 billion KRW, including senior loans of 445 billion KRW, mezzanine loans of 119 billion KRW, and subordinated loans of 110 billion KRW, under the management of Korea Investment & Securities and Shinhan Investment Corp. The maturity is five years with an option for early repayment. Early repayment is automatically triggered upon equity sale. The shares of Acuon Capital and Acuon Savings Bank held by the investment purpose company established by Baring PEA were used as collateral.

Baring PEA acquired Acuon Capital and Acuon Savings Bank from the US-based private equity firm JC Flowers in August 2019 for approximately 700 billion KRW, borrowing 285 billion KRW from Woori Bank. This recap more than doubled the borrowing amount. Through the recap, Baring PEA recovered most of its principal investment. The corporate value of Acuon Capital and Acuon Savings Bank in this recap was evaluated at about 1.2 trillion KRW, approximately 1.25 times their net asset value. The enterprise value calculated using the discounted cash flow (DCF) method was reported to be around 1.4 trillion KRW.

Acuon Capital holds 100% of Acuon Savings Bank’s shares. Baring PEA owns 93.98% of Acuon Capital through a special purpose vehicle. Industry insiders predict that Baring PEA will soon begin the sale of the two companies. Baring PEA previously conducted a recap and sale simultaneously for Rosen Delivery in 2020.

Meanwhile, Baring PEA is currently undergoing an acquisition process by the European private equity firm EQT Partners. EQT Partners is a private equity firm established by the Swedish Wallenberg family.