STIC commits $840m to Korea's Iljin Materials

The transaction comprises a KRW560 billion equity commitment from a newly established co-investment fund and KRW500 billion in acquisition financing provided by Korea Development Bank, KB Kookmin Bank, and Shinhan Bank.

LPs in the co-investment fund include the National Pension Service, Korean Teachers’ Credit Union, Public Officials Benefit Association, Military Mutual Aid Association, Korea Post, Korea Scientists & Engineers Mutual-Aid Association, and National Credit Union Federation of Korea. Most of them are also LPs in STIC Special Situation Private Equity Fund II.

The investment is supporting a capital increase that will see KRW400 billion go to IMG Technology, the holding company responsible for Iljin’s subsidiaries in Malaysia, Europe, and the US. A further KRW600 billion will go to the European subsidiary specifically. The plan is to add two production lines apiece in Malaysia and the US, and four in Europe.

STIC first invested in Iljin two years ago, committing KRW300 billion from its second special situations fund. The capital went to the Malaysian subsidiary, which currently has two production lines.

Iljin wants to boost its annual production capacity to 140,000 tons by 2025 through the establishment of 14 production lines. Doubling the number of lines in Malaysia will increase output from that country to 40,000 tons. Europe, meanwhile, is expected to produce 60,000 tons per year from six lines, focusing on high-end, specialty elecfoil.

STIC said in a statement that Iljin is a global leader in elecfoil production and that expanding its footprint in Europe and the US would help address rising demand while adapting quickly to policy changes. There are also plans to target US automakers that are trying to internalize battery production.

Elecfoil is a thin copper foil that features in printed circuit boards used in televisions, computers, and mobile phones. More significantly from a growth perspective, it is used for cathode collectors in rechargeable lithium batteries – from small batteries to more complex products for automobiles and energy storage.

Similar investments in this space in Korea include KCF Technologies, which produces rolls of copper foil that serve as anodes in lithium-ion batteries, typically for electric vehicles. KCF was one of two assets KKR carved out from LS Group in 2017. It exited 22 months later with a gross multiple of 6.5x and a gross IRR of 175%.

Earlier this year, IMM Private Equity’s credit unit launched a KRW400 billion fund that will invest in components for electric vehicle batteries, such as cathode and anode materials.

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• Topics
• North Asia
• Expansion
• Industrials
• South Korea
• manufacturing
• STIC Investments
• National Pension Service (Korea)
• Korea Post
• Public Officials Benefit Association (POBA)
• Korean Teachers' Credit Union (KTCU)
• energy storage