SCPE seals Korean forklift partnership

The massive conglomerates completed much of their restructuring three years ago, but the mid-size players are still in the midst of it, driven by a wave of industrial consolidation. In most cases, the divestments come about because the parent company wants to remove a financial burden or add capital to its balance sheet.

These were the circumstances in which Standard Chartered Private Equity (SCPE) took a 49% stake in DIV, which has a 50% plus share of South Korea’s forklift business and also sells into 93 markets globally. The company is owned by Doosan Infracore, the country’s largest construction equipment company. According to local media reports, Doosan needed raise funds to repay loans tied to its $3.9 billion acquisition of Bobcat in 2007.

Rather than a buyout, the deal is being structured as a partnership. DIV has retained majority ownership of the company and control of the board, with three seats to SCPE’s two.

“Doosan was unsure whether to spin off DIV by selling it to a third party or doing a stock market listing, or go into a partnership,” says Charles Huh, a Korea-based managing director at SCPE. “There was strategic buyer that wanted to take the forklift business, but Doosan decided it could achieve further growth in this space with us.”

Doosan is keen to see DIV build up a presence in emerging markets in Southeast Asia, South Asia, the Middle East and South America, where urbanization and industrial modernization are strong sources of demand for construction equipment.

Huh notes that SCPE’s global network could help DIV broaden its distribution channels, while Standard Chartered Bank might also provide financial assistance for capital-intensive projects.

SCPE is nearing a close on two further deals in South Korea’s construction equipment sector. However, this particular transaction stands out as it represents the private equity firm’s second foray into a partnership structure.

In 2009, SCPE paid $32 million for a 40% stake in Environmental Facilities Management Corp. (EFMC) in addition to an $8 million facility for business expansion. The company, which provides water treatment services to government and industrial organizations, was formerly a wholly-owned subsidiary of Kolon Group.

The partnership agreement stated that SCPE would leverage its global footprint to help EFMC identify new investment opportunities, particularly in China and India. 

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• Topics
• North Asia
• Industrials
• Buyout
• Standard Chartered Private Equity