MBK, IMM to invest over $300 mn in Megazone Cloud

MBK Partners and IMM Private Equity will each be investing 200 billion won ($167 million) in Megazone Cloud Corp., the first South Korean business partner of Amazon Web Service (AWS), according to people with knowledge of the matter on Sunday.

The largest-ever investment for a Korean cloud services provider helped it gain unicorn status, or a company with a valuation of over $1 billion. 

For the investment, North Asia-focused MBK will tap its second special situations fund, MBK Partners SSF II, which closed on $1.8 billion last year. For Seoul-based IMM PE, Megazone will become the last investment for its fourth blind pool fund, using up its 1.9 trillion won in capital.

The startup's corporate value is estimated to have trebled to the higher end of the 1 trillion won range, compared with the 600 billion won last June when it closed its second round of Series B funding.

“The valuation reflected its rapid growth,” one of the sources told The Korea Economic Daily’s capital market news outlet Market Insight. Megazone Cloud posted its first-ever profit last year, setting it apart from its competitors remaining in the red, he said.

Its sales more than trebled to 900 billion won in 2021, versus the previous year’s 253 billion won.

The largest cloud services provider in South Korea offers cloud service introduction, design, embedment and operation. It has more than 3,700 corporate customers and manages offices in the US, Canada, China, Japan, Hong Kong and Vietnam.

It came to the spotlight in 2012 when it was selected as the first Korean partner of AWS as an in-house division of Megazone Corp., which provides computer system design services.

With the country’s cloud service market projected to exceed 5 trillion won in revenue this year, established IT services providers such as Samsung SDS Co. and LG CNS Co. are venturing into the market.

After splitting off from Megazone in 2018, it received two rounds of funding from outside investors.

In Series A funding in 2019, Megazone Cloud received a combined 48 billion won from 23 investors including state-run Korea Development Bank, Kakao Investment Co. and KT Investment.

In Series B funding from 2020 to 2021, the firm attracted a combined 190 billion won from investors including Salesforce Ventures, global software company Salesforce’s investment arm.

Megazone Cloud will use the proceeds to secure IT talent and for global business expansion, as well as prepare for its initial public offering.

Beyond the leading managed service provider, it aims to become an integrated digital platform that offers non-fungible tokens (NFTs), artificial intelligence and virtual human services.

Last year, the firm selected KB Securities Co. as the bookrunner aiming for an IPO in 2023.

Capitalizing on the popularity of cloud services, sector latecomers Bespin Global Inc. and Cloocus Co. are in the process of fundraising, each targeting 100 billion won.

Write to Si-Eun Park and Jun-ho Cha at seeker@hankyung.com
Yeonhee Kim edited this article.