Baring Asia realizes 2.4x return on Korea cement deal

The investment has generated a 2.4x multiple and an IRR of 70%, according to a source familiar with the situation. Asia Cement, a listed mid-tier construction materials producer, said last month that it had agreed to acquire Halla Cement for KRW365.1 billion ($335 million). The price did not include debt.

This is the second full exit from Baring’s sixth fund, which closed at $3.98 billion in early 2015. It follows the sale of a 31.4% stake in Japanese home improvement center operator Joyful Honda for JPY56.6 billion ($513 million) through participation in a tender offer launched by the company. Baring is expected to launch its seventh pan-Asian fund in the first half of 2018.

Founded in 1978, Halla operates an integrated main plant and three slag cement plants with an annual cement capacity of 7.6 million tons. The core cement manufacturing facility – which has both limestone reserves and waterfront access – is supported by 11 distribution centers nationwide. LafargeHolcim paid $114 million for a 39.9% interest in the company in 2000 and later assumed majority ownership, renaming it Lafarge Halla Cement.

Baring and Glenwood Private Equity – a GP led by Sang-Ho Lee, son of Hak-Soo Lee, formerly vice chairman at Samsung Group – acquired the company from LafargeHolcim in April 2016 for approximately KRW560 million. They created a new stand-alone business with a fresh corporate identity. Baring bought out its partner to take full control in May 2017.

“Our relationship with the LafargeHolcim group dates back to 2011, and we’re pleased that we were able to work closely with them to successfully achieve their strategic realignment through this complex carve out. The Korean cement industry is consolidating, and Halla Cement has a leading market position and a broad coastal presence which makes a perfect combination with a player like Asia Cement, who has a deep inland network,” said Han Chul Kim, a managing director with Baring, in a statement.

The combined Halla Cement-Asia Cement business will be Korea’s third-largest player in Korea’s cement industry with a 19% share, putting it closer to market leaders Ssangyong Cement and Hanil Cement. Ssangyong is majority-owned by domestic GP Hahn & Co, which has made a string of cement acquisitions. Hanil became the largest player by market share last year when it bought Hyundai Cement.

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• Topics
• North Asia
• Trade sale
• Industrials
• South Korea
• manufacturing
• Baring Private Equity Asia
• Exit