GS-affiliated SI company acquired in 2018 up for sale again
Kakao reviews acquisition but 'drops' deal
[Asia Economy Reporter Kwangho Lee] IMM Investment is putting the system integration (SI) company GS ITM, which it acquired in 2018, on the market. Although the goal has been an initial public offering (IPO) or sale of existing shares, the situation has been challenging. Despite continuous attempts to exit (recover investment funds), a breakthrough has not been achieved.
According to the investment banking (IB) industry on the 13th, IMM Investment is selling GS ITM. Currently, it is pursuing the sale of management rights to some companies. The transaction target is Arete One LLC (76.19%), a special purpose company (SPC) established by IMM Investment and JKL Partners. An IB industry insider said, “Kakao considered acquiring GS ITM but dropped out,” adding, “It is back on the market, attracting industry attention.”
In 2018, IMM Investment and JKL Partners established an SPC to acquire GS ITM. They each invested 50 billion KRW, totaling 100 billion KRW, and acquired 80% of GS ITM’s shares. The plan was to increase GS ITM’s corporate value over several years and then exit through an IPO.
At that time, GS ITM carried the risk of ‘preferential treatment’ within the GS Group. As a company responsible for GS Group’s IT services, GS Group’s owner family members held shares: Heo Seo-hong, Executive Director of GS Energy (22.7%), Heo Yun-hong, Vice President of GS Construction (8.4%), and Heo Jun-hong, Vice President of GS Caltex (7.1%).
The main customers were GS Group affiliates such as GS Retail and GS Caltex. Since internal transactions accounted for more than half, it was cited as a company subject to the Fair Trade Commission’s preferential treatment regulations. Under the Fair Trade Act, unlisted companies where large business owners hold more than 20% of shares are subject to government regulation if internal transactions exceed 12% of annual sales.
Because of this, GS put GS ITM up for sale to escape Fair Trade Commission regulations. Samil PwC was appointed as the sales lead manager, and KL Partners as legal advisor for the sale, but the deal did not materialize. Afterwards, IMM Investment and JKL Partners rolled up their sleeves and proceeded with the sale. Subsequently, GS ITM secured new revenue sources by winning orders from IMM Group affiliates.
Currently, the largest shareholder of GS ITM is Arete One LLC (76.19%), the SPC of IMM Investment and JKL Partners. The remaining shares are held by the GS family and others. The order is Heo Seo-hong, Vice President of GS (4.33%), Heo Seon-hong, 4th generation GS family member (2.43%), and Heo Yun-hong, Head of New Business Orders at GS Construction (1.59%).
IMM Investment and JKL Partners stated, “We are not currently proceeding with a sale, and the company is steadily preparing for an IPO in 2025.”
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