Macquarie Korea Asset Management (Macquarie PE) emerged as one of the major clients in the South Korean acquisition financing market in 2020, after arranging deals worth 4 trillion won ($3.65 billion), according to league tables compiled by thebell.
Domestic financial institutions arranged deals worth around 21 trillion won ($19.1 billion) during the year, down from 22.3 trillion won in 2019. Most of the deals were derived from private equity firms’ new investments and refinancing on their portfolio companies, rather than from strategic investors.
Macquarie PE used acquisition financing to fund its deals, though not as much as it had previously. In 2018, the firm used acquisition financing worth 1.9 trillion won in deals to acquire ADT Caps with SK Telecom, while MBK Partners provided financial institutions with deal opportunities worth 2.93 trillion won and Hahn & Company deals worth 2.66 trillion won during the same period. Macquarie PE funded 110 billion won through acquisition financing for its Koentec acquisition in 2019.
However, Macquarie PE emerged as the major player in the acquisition financing market last year, starting with its Daesung Industrial Gases deal. Macquarie PE acquired the company for 2.5 trillion won from MBK Partners in February 2020, and funded 1.53 trillion won through acquisition financing. Five financial firms, including Samsung Securities and KB Securities, acted as joint arrangers for the deal.
The private equity firm also funded its investment in LG CNS through acquisition financing in April. Macquarie PE acquired a minority stake in the company for over 1 trillion won and used acquisition finance worth 520 billion won. Samsung Securities, KB Securities, KB Kookmin and Korea Investment & Securities were its joint arrangers.
Refinancing of the debt used to fund the takeover of South Korean security firm ADT Caps was the largest deal of the year, with acquisition financing of 19.5 trillion won. The deal was arranged jointly by KB Kookmin, KB Securities, Shinhan Bank, Shinhan Investment Corporation, Korea Investment & Securities and Samsung Securities.
Strong relationships between Macquarie PE and KB Securities and Samsung Securities have continued. KB Securities arranged acquisition financing for Macquarie PE’s acquisition of Linde Korea, and then the Daesung Industrrial Gases and LG CNS deals in 2020. Samsung Securities arranged the acquisition of Koentec in 2019.
Hahn & Co provided deal opportunities worth 3.36 trillion won in 2020, reaffirming its presence in the market. Seven acquisition financing deals were associated with buyouts by Hahn & Co and refinancing of its portfolio companies’ debt, including a 1.5 trillion won refinancing of Ssangyong Cement, a 750 billion won refinancing of H-Ling Shipping and the acquisition of Korean Air Lines’ in-flight businesses.
NH Investment & Securities arranged most of Hahn & Co’s major deals, including H-Line Shipping, SK Chemicals’ biofuel unit, Koavis and KAL’s in-flight businesses.
MBK Partners provided deal opportunities worth 1.56 trillion won to financial firms in 2020, which included the refinancing of NEPA, Golfzon County and Doosan Machine Tools. Woori Bank jointly arranged the NEPA and Doosan Machine Tools deals. (Reporting by Hee-yeon Han)