South Korea’s Hyundai Motor Securities Co Ltd will form a private equity fund to purchase 50 billion won ($41.8 million) worth of convertible preferred stocks issued by JW Bioscience, an affiliate of JW Group that supplies medical devices.
The brokerage firm can exercise a put option to sell shares at 5.5% interest to JW Holdings Corporation or a third party designated by JW Holdings. It is likely to be either JW Holdings or JW Lifescience Corporation.
JW Holdings can exercise a call option to secure 50% of the company shares, plus one share. Hyundai Motor Securities has finished its negotiations with JW Group and started seeking limited partners, sources said on Wednesday (July 29).
JW Bioscience, which manufactures and supplies a wide variety of medical devices used for examining, treating and operating on patients, including diagnostic and diagnostic reagent equipment, was spun off from JW Medical, an affiliate of JW Group, in April 2016.
KB Securities acquired a 60% stake in JW Bioscience in 2017 for 48 billion won in cash and 2 billion won of convertible bonds. It was to exit from the investment at the end of 2019, but scrapped the plan due to JW Bioscience’s sluggish growth. The medical company’s revenue has remained flat at 40 billion won over the past two years, and it recorded a net loss of 13.3 billion won in that period.
JW Bioscience plans to use the proceeds for debt repayment and research and development. Its original technology for a kit that can diagnose sepsis using the enzyme tryptophanyl tRNA synthetase has received a patent in the U.S. and Japan. The company plans to debut on the local bourse when the diagnostic kit is commercialized. According to Research & Markets, the value of the global sepsis diagnostics market is expected to reach $700 million by 2025, from $429 million in 2019.
Hyundai Motor Securities intends to exit from the investment through an initial public offering or execute its put option if things don’t go as planned. (Reporting by Se-hun Jo)