Hana Financial Investment PE, the private equity unit of South Korea’s Hana Financial Investment, is pushing investment in food processing and service businesses to strengthen its position in the home meal replacement (HMR) market
Hana Financial Investment PE has agreed to buy 25 billion won ($20.6 million) worth of new shares issued by Keumho Trading to become the largest shareholder of the fish processing company, sources said on June 4. The company bet on the company’s growth potential and ability to supply fresh products after months of negotiations.
The deal allows the PE firm to expand its portfolio into the fishery industry in addition to existing companies specializing in areas such as meat processing and distribution.
In recent years, the firm’s 200 billion won third blind-pool fund, Hana Equity Partners III, has invested in Dduksim, which processes meat and operates meat restaurants, HMR products platform Fresheasy, and meat processing and distributing company Sejoong. Its portfolio consists entirely of companies from the food processing and service sectors except for Myoung Shin Industrial, an auto parts supplier that the fund invested in two years ago.
Hana Financial Investment PE plans to transform these companies into leading market players which it believes is the key to increases value of food processing and service businesses. Generating synergies among its companies in the sector through vertical consolidation is the firm’s goal.
The HMR segment in the country is at a mature stage and the market size is projected to surpass 5 trillion won by 2022, with an average annual growth rate of more than 10%.
“Dduksim has strength in offline retail channels while Sejoong and Keumho Trading mainly distribute their products through Lotte Mart and Emart which have both online and offline channels,” a Hana Financial Investment PE official said. “We plan to help them to share these distribution channels and further expand channels in the future.”
The firm also plans to launch its fourth blind-pool fund as investments from Hana Equity Partners III are almost complete. The new fund is expected to focus on restructuring opportunities.
Meanwhile, Myoung Shin Industrial, which was the first investment from the third fund, is preparing for an initial public offering (IPO), through which the PE firm will likely make a partial exit. (Reporting by Ik-hwan Choi)