IMM PE, Airfirst Acquisition Financing 1.05 Trillion Refinancing Success

Bridge Loan Repayment and Capital Increase Funding
3 to 4 Times Growth in Corporate Value... Prime Portfolio

IMM Private Equity (IMM PE), a private equity firm, has completed the refinancing of acquisition financing borrowed to acquire industrial gas company Airfirst. It borrowed 1.05 trillion KRW from a consortium of financial institutions to repay the existing bridge loan and will inject the remaining funds into Airfirst's paid-in capital increase.

According to the investment banking (IB) industry on the 1st, Korea Industrial Gas Holdings 1 Co., Ltd. (hereinafter Korea Indus Gas) raised 1.05 trillion KRW with KB Kookmin Bank, Shinhan Bank, KB Securities, and Samsung Securities as lead arrangers. Korea Indus Gas 1 is a special purpose vehicle established by IMM PE to acquire Airfirst.

IMM PE provided 70% of Airfirst's shares as collateral to raise acquisition financing. IMM PE acquired 100% of Airfirst (then Linde Korea) shares in 2019 and held them, but recently sold 30% of the shares to the global private equity fund BlackRock. After the sale, IMM PE used the remaining 70% stake as collateral to raise large-scale acquisition financing.

IMM PE recruited acquisition financing lenders by dividing the loans into senior tranche of 850 billion KRW and subordinated tranche of 200 billion KRW according to collateral rights and repayment priority. The loan maturity is 5 years (due November 30, 2028), and the interest rate is known to be around 7%. If any of the collateralized Airfirst shares are sold, a specific investor exits to cash out, or new loans are taken, the principal and interest must be repaid immediately.

IMM PE plans to use the raised funds to repay existing acquisition financing and for Airfirst's paid-in capital increase. Airfirst will raise 200 billion KRW through a third-party allotment capital increase targeting major shareholders IMM PE and BlackRock. IMM PE and BlackRock will invest 140 billion KRW and 60 billion KRW respectively according to their shareholding ratios.

Airfirst has become a valuable investment portfolio for IMM PE by showing steep performance growth. Annual sales, which were in the early to mid-200 billion KRW range at the time of acquisition, exceeded 600 billion KRW by the end of last year. Operating profit increased from around 40 billion KRW to 83.4 billion KRW during the same period. Both sales and operating profit more than doubled within three years of acquisition.

Along with improved performance, corporate value also increased significantly. IMM PE acquired 100% of Airfirst shares for 1.4 trillion KRW but recently sold 30% of the shares to BlackRock for over 1 trillion KRW. This is interpreted as valuing Airfirst's corporate value at over 3.5 trillion KRW.

Due to rapid growth, when IMM PE sold 30% of its shares, not only BlackRock but also global top-tier investment institutions such as Blackstone, Kohlberg Kravis Roberts (KKR), and Carlyle Group showed keen interest in acquiring Airfirst shares.

An IB industry insider said, "IMM PE recovered a significant portion of its investment principal by selling 30% of the shares," adding, "It is expected to realize considerable capital gains when exiting shares through an initial public offering (IPO) or mergers and acquisitions (M&A) in the future."