IMM Private Equity (IMM PE) is exploring ways to use its private credit unit as an entity to invest in pre-initial public offering companies, according to sources.
The Seoul-based firm has recently been included in the shortlist of potential buyers for minority stakes in SK Lubricants and T Map Mobility, a subsidiary of SK Telecom.
IMM PE has several active private equity funds with enough capital to deploy, including its latest blind-pool fund and co-investment fund. At the same time, the firm is considering launching its first deal-by-deal private credit fund, after kicking off its private credit business, IMM Credit Solutions, in September last year.
“Partners at IMM Credit Solutions started sounding out investors for a potential deal-by-deal fundraising,” an industry insider said. “The move is seen as preparation for launching a private credit fund if IMM PE is named as the preferred bidder for either company.”
Sales of minority stakes in SK Lubricants and T Map Mobility are expected to be structured to offer downside protection to financial investors, with a promise of a guaranteed return, as seen in many past deals involving affiliates of the SK Group. This makes either deal a good fit for private credit, which is viewed as a mid-risk, mid-return type of investment.
Private credit funds invest in various debt securities, such as investment-grade and high-yield corporate bonds, asset-backed securities, collateralized loan obligations and commercial mortgage-backed securities, as well as direct lending and mezzanine debt.
IMM Credit Solutions is the first private credit business launched by a homegrown private equity firm. It is seen as part of an effort by IMM PE to diversify investment strategies away from its traditional buyout business as investors pour more money into private markets.
“IMM Credit Solutions is expected to attempt to raise its blind-pool fund after building a track record on a deal-by-deal basis,” said another insider. “It will take time for it to become clearly differentiated as a private credit firm.” (Reporting by Ar-rum Rho)