MBK to buy Korean gas business from Goldman consortium
MBK Partners has agreed to buy Daesung Industrial Gases from a Goldman Sachs-led consortium that has majority-owned the South Korean industrial gas manufacturer since July 2014.
The size of the transaction was not disclosed, but parent company Daesung Group said in a filing that it would transfer 40% of Daesung Industrial Gases to Korea Industrial Gas Holdings for KRW354.9 billion ($314 million). This implies an equity valuation for the entire company of KRW887 billion. According to local media, Daesung Industrial Gases will be sold for around KRW2 trillion, including debt.
Korean conglomerates Hyosung Corporation and SK Group both announced last December that they had submitted bids for the company. Private equity firms including TPG Capital and PAG Asia Capital are also said to have participated in the auction process.
The Goldman consortium acquired a 62% holding Daesung Industrial Gases for $400 million, including $200 million in convertible bonds, with Daesung Group retaining the rest. Other investors include Min-Joo Lee, ex-chairman of cable TV provider C&M Communications. Goldman previously was an investor in C&M.
The sale came about because Daesung Group – under pressure due to weakness in the real estate sector that left listed unit Daesung Industrial with heavy losses – needed to divest assets as a means of serving its debts. The parent had a one-time call option on the consortium's stake in 2018 at a pre-determined valuation multiple.
Daesung Industrial Gases supplies general industrial gases and specialty gases to the consumer electronics, semiconductors, steel and petrochemicals industries. Samsung Electronics, SK Hynix and LG Display are among its customers. It posted KRW484.9 billion in revenue last year, down from KRW564.1 billion in 2015, while net income fell to KRW14.7 billion from KRW25.5 billion over the same period.
MBK is currently investing its fourth North Asia-focused buyout fund, which reached a first and final close of $4.1 billion in December 2016.
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