LG Chem to Sell Water Solution Division to Glenwood PE

Both Sides Discuss Specific Terms
Sale Price Expected to Be Around 1 Trillion Won

Private equity firm Glenwood Private Equity (PE) is set to acquire the Water Solution division of LG Chem. This division specializes in the production of reverse osmosis (RO membrane) filters, which purify seawater for use as industrial water, and holds the second-largest global market share in this field. The expected sale price exceeds 1 trillion won.

According to the investment banking (IB) industry on April 28, LG Chem has selected Glenwood PE as the preferred bidder for the sale of its Water Solution business unit. The process involves transferring personnel and assets to a newly established corporation, which Glenwood PE will then acquire. The deal is currently in the pre-due diligence stage, and both parties are expected to begin detailed reviews soon.

Last year, the division generated approximately 250 billion won in revenue, with gross profit and EBITDA reaching about 90 billion won and 65 billion won, respectively. The sale price is being discussed at just over 1 trillion won, which is roughly 20 times EBITDA. The assets included in the sale reportedly cover the Cheongju plant, membrane production technology, and the global water treatment network, encompassing the entire business unit.

LG Chem entered the RO membrane market in earnest after acquiring US-based NanoH2O in 2014 and establishing mass production facilities at its Cheongju plant. The company currently holds the second-largest global market share, following Japan's Toray. In 2023, LG Chem expanded the Cheongju plant and set a goal to double the business within five years. However, due to prolonged weakness in its core petrochemical business, the company has decided to focus on strengthening its financial structure.

Glenwood PE plans to use its second blind fund and the newly established third fund to finance the transaction. The firm also intends to make additional investments in the Water Solution division to enhance its global competitiveness.

A Glenwood PE representative stated, "Water is extremely important worldwide, not only for industrial water but also for manufacturing semiconductors and generating electricity. We believe water will become even more important in the future, and if we complete the acquisition, we plan to increase investment, expand facilities, and grow the company into a larger global player."

Glenwood PE is a domestic private equity fund specializing in "carve-out" deals, acquiring business units spun off from large conglomerates. Last year, the firm entered the related sector by acquiring Techcross, formerly LG Group's water treatment subsidiary, and also built a relationship by acquiring LG Chem's diagnostics business unit.

LG Group highly valued Glenwood PE's track record of making large-scale investments and maintaining stable employment for employees at acquired companies, which led the group to select Glenwood PE as the new owner over proposals from global private equity firms.