BPEA EQT cancels purchase of Korea's PI Advanced Materials
BPEA EQT – formerly Baring Private Equity Asia – has pulled out of its planned acquisition of a majority stake in Korea-based industrial films producer PI Advanced Materials from Glenwood Private Equity.
PI Advanced said in a filing that it was informed of BPEA EQT’s decision to cancel the purchase agreement on December 8. It added that Glenwood believed the move is contractually invalid and was urging BPEA EQT to make good on the agreement.
The company’s stock fell 3.46% on December 9 to close at KRW 30,700, giving it a market capitalisation of KRW 901.5bn (USD 692m). In June, BPEA EQT agreed to buy Glenwood’s 54% stake for KRW 1.28trn, or KRW 80,302 per share. Back then, PI Advanced was trading around KRW 50,000. This followed its transfer from KOSDAQ to the Korea Exchange’s main board.
PI Advanced was established in 2008 as a joint venture between SKC – a chemicals-focused subsidiary of SK Group – and Kolon Industries. Originally known as SKC Kolon PI, the company became the world’s leading supplier of polyimide film in 2014. SKC and Kolon each sold a 27% interest to Glenwood in 2020 for USD 512m.
The company’s films are essential base materials used in printed circuit boards, graphite sheets, and batteries that feature in smart phones and other electronic devices and electric vehicles. It also produces polyimide varnish that is used in electrical insulation.
Sales came to KRW 300bn in 2021, up from KRW 260bn a year earlier. Over the same period, net income rose from KRW 41.7bn to KRW 64bn. In 2019, it was only KRW 17.7bn. The decline in PI Advanced’s stock price coincided with weaker financials. In the third quarter, sales and operating profit were KRW 70.3bn and KRW 14.1bn, respectively, down 12.5% and 26.6% year-on-year.
Glenwood was established in 2014 and made its first two investments – in Tongyang Magic and Halla Cement – on a deal-by-deal basis. Supported by strong exits from these investments, it raised a debut blind pool fund of KRW 450bn. A second vehicle of KRW 900bn closed earlier this year. The strategy is almost exclusively carve-outs.
BPEA EQT is currently deploying its eighth pan-regional fund, which closed in September with USD 11.2bn in commitments. In March, Baring Private Equity Asia agreed to merge with EQT. The deal closed in October.
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