Korea's IMM, Mirae invest $224m in POSCO Specialty Steel
IMM Private Equity and Mirae Asset Private Equity have together invested KRW250 billion ($223.6 million) for a 24% stake in POSCO Specialty Steel (POSCO SS), an affiliate of national steelmaker POSCO. POSCO SS abandoned an IPO effort in December – set to raise up to $424 million – and the private equity capital is expected to support expansion efforts before the company returns to market, possibly within five years.
IMM and Mirae each committed KRW125 billion to the deal. According to a regulatory filing, they will subscribe to 8.6 million convertible preference shares with a conversion price of KRW29,000 per share and a maturity of five years.
Founded in 1997, POSCO SS produces stainless steel, tool steel and special alloy steel with an annual capacity of 960,000 metric tons. It supplies the automotive, aviation, shipbuilding and electronics industries. The company wants to achieve a capacity of 2.5 million tons by 2020 with turnover reaching KRW4.5 trillion.
POSCO SS' main factory is based in Seoul but it has been expanding its regional footprint, breaking ground on the POSCO SS-VINA steel mill in Vietnam last year. Since 2008, the company has also been busy opening offices in China, Thailand and Japan. Its client base spans Europe, North America, the Middle East and South Africa, as well as Asia.
In 2011, POSCO SS had a sales volume of 728,000 metric tons, predominantly semi-finished steel products, wire rods and seamless steel pipes and tubes. Sales for the year reached $1.4 billion while net income came to $111 million.
IMM's investment comes from its second fund, which closed at KRW800 billion in December 2012. Last month the firm completed the acquisition of Hollys Coffee, one of South Korea's leading coffee shop chains, in a deal expected to be worth up to $100 million.
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