IMM set for 2.3x return from Korea's Tailim Packaging

The company, which was established in 1976, manufacturers paper and packaging products ranging from liner paper to packaging boxes for electrical appliances. It has 12 plants nationwide, including four paper mills and eight packaging mills.

It produces 1.2 million tons of base packaging paper per year, accounting for a 22.5% share of the Korean market. Meanwhile, in the packaging boxes segment, Tailim claims to be the industry leader with an annual output of 1.2 billion square meters. The company’s market share is 23%. It is expanding from industrial packaging into household goods packaging as part of efforts to achieve KRW1.2 trillion ($1 billion) in sales by 2020.

IMM is set to generate proceeds of $700 million from the transaction, according to a source familiar with the situation. It bought Tailim in 2015 for approximately KRW350 billion, committing capital from both its second and third funds. The firm is currently in the market with Fund IV, which reached a first close of $1.3 billion earlier this year against a target of $1.5 billion.

When IMM acquired Tailim, the company had an antiquated business model centered around an aging founder with no clear successor. While it still maintained a leadership position in the packaging industry, revenue was stagnating. Tailim posted a net loss in 2015. IMM set about strengthening the management team and internal systems and building up relationships in key adjacent industries.

“E-commerce was growing, but we wanted to see what other industries were growing with it – and everything gets delivered in a box,” Joseph Lee, a partner and co-CIO at the firm, told AVCJ earlier this year. “The company was run by a gentleman in his 80s who was looking to retire, so he sold to us, and in only three years we’ve quadrupled EBITDA to around $160 million, all through operational improvements.”

Sae-A is a Korea-headquartered clothing manufacturer with a workforce of 60,000 in 10 countries across four continents. It produces 2.5 million articles of clothing every day and generates $2.4 billion in annual exports. The company outbid several other groups – among them TPG Capital and Bain Capital – for Tailim.

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• Topics
• North Asia
• Trade sale
• Industrials
• IMM Investment
• South Korea
• manufacturing