LG Group to put facility management unit of S&I Corp. up for sale

South Korea’s LG Group will put the facility management division of its affiliate S&I Corp. up for sale amid talk that a sale of the unit could help LG avoid being placed under state scrutiny over inter-subsidiary trading at the conglomerate.

According to investment banking sources on Friday, LG, the country’s fourth-largest conglomerate, is seeking to spin off the facility management business from S&I Corp. for sale.

Morgan Stanley is handling the sale of the business, sources said.

S&I, previously known as Serveone, LG Group’s in-house maintenance, repair and operations (MRO) unit, operates in the office construction, facility management and leisure sectors.

Building and office management accounts for about 30% of S&I’s business portfolio.

The planned sale comes as the country’s antitrust body, the Fair Trade Commission, plans to crack down on excessive internal transactions among affiliates of big business groups.

The government steps in when more than 80% of a conglomerate unit’s sales come from other affiliates.

Industry watchers said local and overseas private equity firms with ample liquidity will likely show interest in S&I’s facility management business.

In November 2018, Hong Kong-based PE Affinity Equity Partners acquired a 60% stake Serveone from LG Corp. for 602 billion won ($527 million).

Once officially up for sale, several PE firms are expected to bid for the business, given the facility management unit’s stable cashflow, sources said.

Write to Chae-Yeon Kim at Why29@hankyung.com
In-Soo Nam edited this article.