Naver to join race with EQT, Goldman Sachs for Korean SW firm

Naver Corp. is set to go up against global major private equity firms such as EQT Partners AB and Goldman Sachs Private Equity Group to acquire a South Korean software as a service (SaaS) company as the country’s online giant aims to create synergy with its generative artificial intelligence business.

Naver expressed interest in a 46.91% stake in BusinessOn Communication Co. that its largest shareholders put up for sale, after reviewing a proposal to buy the controlling stake, according to investment banking industry sources on Wednesday.

The Seoul-based private equity firm Praxis Capital Partners, which took over BusinessOn’s management rights in 2019, has already been in talks with potential buyers such as the world’s No. 3 private equity firm EQT Partners, Goldman Sachs Private Equity Group and TA Associates, those sources said.

As competition for the stake intensified, BDA Partners, the financial advisor of the sale, increased the pool of potential buyers by collecting more letters of intent for final bidding in the first half of 2024.

“Naver is one of the potential buyers,” said an investment banking industry source in Seoul. “The seller is likely to take plenty of time until the final bidding as BusinessOn’s earnings are improving.”

Its share price surged 11.3% in the South Korean stock market on Wednesday, far outperforming a 0.6% gain on the tech-heavy Kosdaq.

FOR SYNERGY WITH NAVER’S AI BUSINESS

BusinessOn’s sales nearly tripled to 43.9 billion won ($33.7 million) last year from 15.6 billion won in 2019.

The company, founded as an electronic tax invoice service provider in 2007, expanded its business portfolio as Praxis took over companies in related sectors such as e-contract system developer Glosign and data analysis firm Planit Partners.

Naver is considering the acquisition of BusinessOn to create synergy with its AI business, industry sources in Seoul said.

The online behemoth is nurturing SaaS, a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted, as a future growth engine.

“We are focusing on the expansion in cloud infrastructure, platform and SaaS markets based on generative AI,” Naver CEO Choi Soo-yeon said in the latest quarterly earnings call.

The company has introduced various software services. It launched a beta service of Naver Form, a survey platform, earlier in the day.

Write to Jihyo Lee and Ji-Eun Ha at jhlee@hankyung.com
 
Jongwoo Cheon edited this article.