Baring Asia secures $324m exit from Korean courier business
Baring Private Equity Asia has sold Korean courier company Logen, ending an eight-year holding period that featured a disputed – and aborted – sale to CVC Capital Partners followed by an arbitration proceeding.
The new owner is Cowell Fashion, a listed fashion retail subsidiary of Daemyung Chemical Group. The equity valuation is KRW340 billion ($297 million) while the enterprise valuation is KRW372.3 billion, according to a Cowell Fashion filing. A source close to the situation added that Baring would generate a return of more than 3x on the investment.
Baring bought 100% of Logen from Mirae Asset Private Equity in 2013, reportedly paying KRW160 billion. At the time, Logen was Korea’s leading parcel delivery player in the small to mid-size volume segment, with a network of seven terminals, two sub-terminals, 215 agencies and 4,353 truck drivers. It handles more than 100 million parcels in 2012.
The private equity firm claims to have helped strengthen the leadership team, restructure product offerings to focus on more profitable segments, and improve efficiency through initiatives such as the implementation of a volume forecasting system and automatic route optimization at terminals. Logen now has more than 310 agencies and 7,200 truck drivers, and it handles 272 million parcels annually.
The company set new records in 2020 in terms of parcel deliveries and financial performance as lockdowns and social distancing during the pandemic expedited the shift to online retail, which in turn drove up demand for parcel delivery. Revenue reached KRW512.8 billion, up from KRW442.7 billion the previous year, while net income rose from KRW15.3 billion to KRW18.6 billion.
In 2015, Logen bought a majority interest in domestic counterpart KGB Logistics. However, integration is said to have been challenging and the business was offloaded to KG Group-owned KG Logis in 2017. In between these two events, CVC agreed to acquire Logen for an enterprise valuation of KRW330 billion.
CVC backed out of the deal, claiming that Logen’s financial figures had been inflated, Mergermarket – AVCJ’s sister publication – reported. Baring disputed this, and the case was elevated to the Hong Kong International Arbitration Center (HKIAC) in early 2017.
Several other prospective buyers were subsequently linked to the asset, including private equity firms Well to Sea Investment, JC Partners, and Keystone Private Equity, and strategic players UPS, Wemakeprice, and Shinsegae Group.
"We had identified Logen as a market leader back in 2013 that was well-positioned to benefit from the long-term trend towards e-commerce," said Han Chul Kim, a managing director at Baring, in a statement.
"The company’s leading position has been validated in recent years, in particular during 2020, which was its strongest year on record. Logen now processes 272 million parcels every year, almost 2.5 times more than when we initially invested,”
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