Market insiders are paying attention to ST Leaders Private Equity (ST Leaders PE), a preferred buyer for Hyosung Corporation’s financing arm, Hyosung Capital, and its post-merger integration strategy.
ST Leaders will finance approximately 450 billion won ($387 million) to acquire Hyosung Capital’s new and old shares, industry sources said on September 17. The PE firm plans to spend between 380 billion won and 390 billion won in securing the firm’s old shares and use the rest for a rights offering.
ST Leaders plans to purchase both old and new shares of the firm in a bid to take over more firms through a bolt-on strategy after the acquisition of Hyosung Capital.
The PE firm is expected to use money flows into Hyosung Capital along with some of Hyosung Capital’s cash-equivalent assets to make more M&A transactions. It is likely to acquire a company worth between 100 billion won and 110 billion won and make it a Hyosung Capital’s subsidiary. ST Leaders is reportedly marketing its plan to limited partners.
Market insiders are questioning whether the PE firm’s plan will be realized. Industry sources reportedly said that Hyosung Capital hasn’t chosen a specific acquisition target and whether the company will be able to maximize its strength or supplement weakness by taking over a company with a valuation of a mere 100 billion won.
The Korean Federation of Community Credit Cooperatives is an anchor investor in the project fund that will be used for the acquisition. The deal is likely to be completed as early as November. (Reporting by Ar-rum Rho)