Baring, Glenwood to buy LafargeHolcim's Korea business

LafargeHolcim said in a release announcing its 2015 financial results that the sale of Lafarge Halla Cement is expected to close in the second quarter of this year. Korean media previously reported that Glenwood was chosen as the preferred bidder and then brought in Baring as its partner in the deal.

Lafarge Halla is Korea's fifth-largest cement producer with an annual capacity of 8.3 million tons and around 500 employees. It was set up in 2000 when Lafarge paid $114 million for a 39.9% interest in distressed local player RH Cement Corporation. State of Wisconsin Investment Board also participated in the restructuring. Lafarge subsequently increased its stake, assuming majority control.

The sale is part of a CHF3.5 billion divestment program announced by LafargeHolcim last year in response to a more challenging commercial environment. The merger of Lafarge and Holcim, agreed in 2014, also saw various assets sold off to satisfy antitrust requirements. Preparations for divestments in India actually delivered an exit for Baring as Lafarge bought back a 14% interest in its local division, which had been sold to the PE firm two years earlier as part of efforts to reduce group-wide debt.

Baring, which closed its sixth pan-regional fund at $3.98 billion early in 2015, is not the only private equity investor targeting Korea's cement industry. However, the two other sizeable transactions in the last 12 months have involved distressed assets.

First, KDB Private Equity teamed up with Sampyo Cement Corporation to acquire a 54.96% stake in Tongyang Cement & Energy Corporation from bankrupt Tongyang Group for $595 million. Then Hahn & Co, which already owns several cement assets, agreed to become the largest shareholder in Ssangyong Cement in a deal expected to be worth up to KRW800 billion.

Glenwood is led by Sang-Ho Lee, son of Hak-Soo Lee, formerly vice chairman at Samsung Group. According to AVCJ Research, the firm participated in the KRW279.9 billion purchase of Tongyang Magic, a Korean home and kitchen appliances manufacturer, in 2014.

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• Topics
• North Asia
• Buyouts
• Industrials
• Baring Private Equity Asia
• manufacturing
• South Korea