Carlyle, Solvay show interest in Korea's PI Advanced

PI Advanced Materials Co., the world’s largest polyimide (PI) film manufacturer, has drawn about 10 preliminary bidders, including The Carlyle Group, Belgian chemicals giant Solvay S.A. and South Korea’s Hanwha Solutions Co., according to people with knowledge of the situation on Wednesday.

Seoul-based Glenwood Private Equity put its entire 54% stake in PI Advanced up for sale, after the materials maker for smartphones, electric vehicle (EV) batteries and organic light-emitting diode (OLED) displays logged its largest-ever earnings last year.

Glenwood is asking around 1 trillion won ($821 million) for the stake, or about a 30% premium to its market value and compared with its purchase price of 607 billion won it paid in 2020.

The sale manager JPMorgan received letters of intent from the bidding companies by the deadline of Wednesday.

PI Advanced was established in 2008 as a 50:50 joint venture between SKC Ltd. and Kolon Industries Inc. after the two Korean chemical companies transferred their PI businesses to the venture.

PI films are used in flexible printed circuit boards for smartphones, computers and OLED displays owing to their excellent thermal resistance and electric characteristics. The films are now widely adopted in high-growth areas such as batteries and motors of EVs. 

Driven by it capacity expansion and higher demand from smartphone and display companies, operating profit at PI Advanced leapt 26.4% on-year to its record-high 76 billion won, with sales up 15.3% to 302 billion won.

Once PI Advanced’s new facilities under construction come online in the second half of this year, its production capacity is expected to rise to 5,700 tons per year by 2023.

RISING SHARE PRICE

The upcoming sale of PI Advanced will come on the heels of Glenwood's profitable exit from the country's No. 2 glassmaker HanGlas Co. Both companies are major investments for its first blind pool fund that raised 450 billion won in 2018, for which the PE firm has kicked off the divestment process.

"Domestic and foreign companies are showing interest in PI Advanced, which has a global competitiveness in the PI market,” one of the sources told The Korea Economic Daily’s capital market news outlet Market Insight.

“But its high price tag could pose a stumbling block to its sale process."

The sell-side demanded PI Advanced's valuation should reflect future profit growth based on its growing production capacity, while bidders saw the suggested price above their estimates.

Its shares were traded 4.62% higher at 48,650 won on the Kospi market around midday. In the morning, the stock rose as high as 51,300 won, its peak in two and a half months, after Market Insight broke news about its bidders.

Separately, Glenwood PE is in talks to buy Hanwha Solutions' advanced materials division for 600 billion won, according to other sources familiar with the matter last week.

The division to be split off from Hanwha produces electronic materials such as high-performance films used in mobile gadgets and display panels, alongside automotive parts and materials for solar panels.

Write to Chae-Yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article