Korea's SG Private Equity to buy local industrial gas supplier

South Korea’s SG Private Equity is set to acquire local industrial gas supplier Hankook Special Gases Co. for a deal in the early 100 billion won ($71.8 million) range, investment banking sources said on Sept. 16.

The PE firm is in final negotiations to buy a 100% stake in the gas supplier. The gas company's CEO Seo Heung-nam is the largest shareholder with 97%.

Hankook Special Gases has manufactured and supplied industrial and medical gas to customers mainly in North Jeolla Province since its inception in 1994.     

Last year, it began producing carbon dioxide (CO₂) which is used in soda, semiconductors, steel, shipbuilding, medical treatment and sewage management.   

In July, the company signed a memorandum of understanding with Korea’s leading chemical firm Kumho Petrochemical Co.

Under the agreement, Kumho will set up carbon capture, utilization and storage (CCUS) facilities by 2024 in the combined heat and power plant of Yeosu Industrial Complex, the largest petrochemical complex in the country, to capture 70,000 tons of CO₂ a year. Hankook Special Gases will manufacture liquefied carbon dioxide with the CO₂.

Hankook Special Gases has shown solid earnings amid COVID-19. The firm posted 38.9 billion won revenue and 7.2 billion won operating profit last year, after 36.9 billion won revenue and 7.7 billion won operating profit in 2020. The company is forecast to log similar earnings this year.

SG Private Equity will acquire the gas company via its fourth blind pool fund, which the PE firm is creating with up to 700 billion won. State-run Korea Development Bank is the anchor investor in the fund, focusing on securing the management rights of target companies.

The PE firm has invested in fast-growing sectors such as mobility, biopharmaceuticals and over-the-top (OTT) services. It has invested in Socar Inc., Alteogen Inc., LegoChem Biosciences Inc. and SPOTV Co. over the past few years.

The investment firm shifted its focus from rapid growth to a steady stream of cash flow this year. In May, SG Private Equity participated in the Korea Heroes Incorporation Group (KHI)-led consortium to acquire mid-sized shipbuilder Daehan Shipbuilding for 200 billion won.

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