IMM Investment has started its funding process to acquire a remaining stake in South Korean real estate company Najin Industry. The private equity (PE) firm plans to raise approximately 75 billion won ($61.7 million) through a project-specific fund and acquisition financing.

IMM Investment has started to secure funds to acquire the remaining 26.95 percent stake in Najin Industry, according to sources on June 15. IMM Investment valued a 100 percent stake of the company at 280 billion won when it purchased a stake in the real estate company in 2017. It is likely to spend about 75 billion won to take over the remaining stake.

The private equity firm is creating a project-specific fund and has reportedly begun a marketing campaign aimed at limited partners. An investment banking industry source said that IMM Investment is seeking investors for its project-specific fund while the firm is also expected to use acquisition financing.

Najin Industry is owned by shareholders, including IMM Investment, an heir to late Najin Industry founder Lee Byung-doo and social welfare organization Yongsan Sanheewon. The PE firm initially planned to take over the remaining stake in the first half of this year. But due to a delay in the marketing campaign, the process is likely to be completed in July.

Enhancing the real estate firm’s enterprise value is the key to securing investors for a project fund. IMM Investment plans to acquire all of Najin Industry and normalize its business before it resells the company. The PE firm needs to come up with a plan that potential investors will agree on.

But industry watchers see some uncertainties over Najin Industry. The firm’s leasing business is centered on the Najin electronics market in Yongsan, home to local electronics retailers and wholesalers and computer manufacturers.

According to data from Sangga Lab, mid- and large-sized buildings in the Yongsan area reported a vacancy rate of 11.4 percent in the fourth quarter of last year, 3.4 percent points higher than the city-wide average of 8 percent. The area’s vacancy rate has increased by 2.9 percent points compared to the previous quarter. This is because wholesale and retail sectors have shifted from offline to online.

Market insiders said Najin Industry may enhance its enterprise value through real estate development. Given its current location the company’s leasing business may shift its focus from retailers and wholesalers that sell gadgets and home appliances to officetels, multi-purpose buildings with residential and commercial units.

“Enhancing Najin Industry’s enterprise value isn’t likely to go smoothly, considering legal issues related to real estate development and the fact that IMM Investment has no experience in real estate development,” said another industry source. (Reporting by Byung-yoon Kim)