IMM PE exits S.Korea's No.2 electric wire manufacturer

Seoul-based IMM Private Equity has fully exited its 300 billion won ($265 million) investment in the country's No. 2 electric wire manufacturer by selling a majority stake to a domestic apartment builder.

IMM signed an agreement on Mar. 29 to sell a combined 54.03% stake in Taihan Electric Wire Co., composed of its 40% and the remainder held by creditor banks, to Hoban Group, according to Taihan Electric's regulatory filing.  

The transaction value is 350 billion won, based on the per-share sale price of 735 won, equivalent to around a 35% discount to Friday's closing price. 

From the Monday divestment, IMM received 251.8 billion won, apart from the unspecified amount of proceeds from the previous four block sales of other stakes in Taihan Electric.

IMM PE had acquired a 71.51% stake in then cash-strapped Taihan Electric for around 300 billion won in 2015. Since then, it has reduced its shareholdings to 40% through block trades. 

Hoban Group, based in South Jeolla Province, southwest of Seoul, has been trying to diversify beyond its flagship construction business in search of new growth drivers. Last year, it entered the race to acquire a domestic waste treatment company in vain.

To secure the majority stake in Taihan Electric, the apartment builder competed until the last minute with Global Sae-A Co., a Korean apparel maker. Hoban beat over the local rival in non-price factors such as growth plans, according to investment banking sources.

Back in 2014 when Taihan Electric was on the block, Hoban was touted as a potential buyer.

Taihan Electric is capable of producing ultra-high-voltage power cable systems with a transmission capacity of more than 500 kilovolts. That was designated as one of South Korea's core national technologies in 2019, in an effort to keep foreign investors from acquiring the cable manufacturer.

Also, the company is one of only a few Korean underground power cable producers. The growing offshore wind power market underpins its business outlook, driven by Green New Deal government policies, which will lead to heavy investments in renewable energy sources.

Since IMM's acquisition, Taihan Electric has jettisoned non-core businesses to shore up its balance sheet and has advanced into overseas markets for large-scale projects. 

In 2020, its operating profit shot up by 70% to 56.6 billion won from a year earlier, with sales steady at 1.6 trillion won.