Hahn & Co-owned Cowell e Holdings files for Hong Kong IPO

The size and pricing of the offering has yet to be decided, although it has been reported that the company will seek to raise up to $200 million. A Cowell regulatory filing also gave no indication as to how much of its 50% interest in the company Hahn & Co. might divest.

This was the first deal from the private equity firm's debut fund, which closed at $750 million in 2011, one year after CEO Scott Hahn left his previous role as CIO at Morgan Stanley Private Equity Asia. Hahn & Co. closed its second fund in early December at $1.2 billion and also raised a $700 million co-investment pool to support the $3.6 billion acquisition of Halla Visteon Climate Control.

The Cowell deal was unusual in that it was structured as a tender offer for a listed company. Korea has only seen around 30 of these and most of them involved existing shareholders with large majority stakes buying whatever they didn't already own. The regulatory obstacles are burdensome - for example, investors are required to have all the capital in place when making the offer.

Hahn & Co. teamed up with Cowell's chairman, Joung Hwan Kwak, who already owned 66.5% of the company, and submitted a privatization offer in August 2011. Their bid of KRW4,300 per share valued Cowell at approximately KRW129 billion ($114 million). The process was completed in May 2012.

The PE firm committed KRW86.2 billion to the deal - KRW42.9 billion through the tender offer and KRW43.3 billion paid to Kwak for the shares needed to balance ownership of the company at 50% apiece.

Cowell manufactures camera modules used in smart phones, multimedia tablets and other mobile devices. According to IBS, the company's global market share in 2013 was 5%, making it the sixth-largest supplier. The market saw shipments of 3.8 billion units, worth $16.4 billion, in 2013 and this is expected to reach 7.3 billion units, or $34.4 billion, by 2020.

Apple has been a Cowell customer since 2009 and was directly or indirectly responsible for around 85.8% of company turnover in 2013. This share was expected to fall to around 80% in 2014. The company's five largest customers together account for more than 99% of turnover, with other major partners including LG Electronics, Hitachi and Samsung Electronics.

Turnover came to $813.9 million in 2013, up from $527.5 million the previous year, and then $279 million in the first half of 2014. The company saw net profit rise from $13.2 million in 2012 to $50.2 million in 2013. This was followed by $9.7 million in the first six months of 2014.

Morgan Stanley is serving as sole sponsor for the offering.

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• Topics
• Technology
• North Asia
• Exits
• South Korea
• Hong Kong (China)
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• Hahn & Co
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• manufacturing