[PE Now] No Failures for 'Carve-out Specialist' Glenwood PE

LG Chem Selects Preferred Bidder for Water Solution Division
Glenwood PE Stands Out in Carve-Out Deals
First and Second Funds Succeed... Third Fund Reaches 1 Trillion KRW

Glenwood Private Equity (hereafter Glenwood PE) is making its presence felt in the 'carve-out' deals involving the sale of business divisions by corporations. Having appeared in major carve-out deals by large conglomerates and successfully acquired significant businesses in succession, Glenwood PE is now set to acquire the Water Solution division of LG Chem.

'Carve-out Specialist' Glenwood PE to Acquire LG Chem Water Solution

According to the investment banking (IB) industry on April 30, LG Chem has selected Glenwood PE as the preferred bidder for the sale of its Water Solution business unit. 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.

The background for Glenwood PE's selection as the preferred bidder in this deal is attributed to its acquisition of LG Chem's in vitro diagnostic medical device business (diagnostics division) in 2023. At that time, LG Chem highly valued the fact that employees of the target company did not suffer from job insecurity in previous acquisitions, leading to the selection of Glenwood PE. This factor appears to have played a significant role in the current deal as well.

Last year, the Water Solution division recorded sales of approximately 250 billion KRW, with gross profit and EBITDA at around 90 billion KRW and 65 billion KRW, respectively. The sale price is being discussed at just over 1 trillion KRW, which is about 20 times EBITDA.

A Glenwood PE representative stated, "Water is an extremely important issue worldwide, as it is needed not only for industrial water but also for the production of semiconductors and electricity," adding, "If we complete the acquisition, we plan to increase investment, secure facilities, and grow the business into a global company."

No Failures... Third Fund Also on Track

Founded in 2014 and now in its 11th year, Glenwood PE has built differentiated competitiveness by successfully executing major carve-out deals.

Its first deal was the acquisition of Tongyang Magic (now SK Magic) in 2014 for 301 billion KRW, which it sold in 2016 for 610 billion KRW. In 2019, Glenwood PE acquired Korea Glass Industrial from France's Saint-Gobain for 310 billion KRW and later sold it to LX International for 600 billion KRW, achieving a total return of 93%.

A major driving force was the successful liquidation of its first fund, which was established in 2018 with a size of 450 billion KRW and achieved an internal rate of return (IRR) of about 30% without any failed cases. Portfolio companies included Haeyang Energy and Seorabeol City Gas, Korea Glass Industrial (now LX Glass), SKC Kolon PI (now PI Advanced Materials), and CJ Olive Young.

Building on this, Glenwood PE was able to establish its second fund in 2021 with a size of 900 billion KRW, doubling in scale compared to the first fund. This fund invested in CJ Olive Young, LG Chem's diagnostics division (now Invitros), SK PU Core, and Techro Environmental Service, among others.

The third fund, currently being raised this year, is being structured at a scale of 1 trillion KRW, larger than previous funds. The first closing is scheduled for next month, with a final closing planned at 1.5 trillion KRW by the end of the year. Glenwood PE plans to utilize both the second and third funds for the acquisition of LG Chem's Water Solution division. By engaging in a major deal before the fund closes, Glenwood PE has once again attracted the attention of large domestic and international institutional investors (LPs).

The Key Strength: 'PMI'

Glenwood PE systematically implements 'Post-Merger Integration' (PMI) for acquired companies. Through this process, it restructures businesses and helps them realize their potential as independent companies.

A representative example is PI Advanced Materials, the global leader in polyimide (PI) materials, which Glenwood PE acquired in 2020 for 608.9 billion KRW and sold last year for 1 trillion KRW. After acquiring PI Advanced Materials, Glenwood PE executed PMI strategies across various areas, focusing on improving inefficiencies stemming from its joint venture (JV) structure with existing shareholders. It actively invested in mobility, display, and semiconductor sectors, and supported the launch of diverse new products.

The transfer of listing to KOSPI and inclusion in the KOSPI 200 index were undertaken to maximize shareholder value and the symbolic status of being the global leader in the PI film market. During this process, numerous non-deal roadshows (NDRs) with securities firms and institutional investors were held, naturally leading to improved recognition in the capital market.

Glenwood PE's involvement in CJ Olive Young's business, including the delivery service 'Ohnul Dream,' expansion of online and offline stores, and growth of the health functional food business, also exemplifies its PMI strategy. In 2021, Glenwood PE acquired a 22.6% stake in CJ Olive Young and sold it back to CJ Group three years later in 2024, recovering 780 billion KRW. The investment principal was 414 billion KRW, and the IRR reached 30%.