Glenwood PE puts Korean dishwasher maker up for auction

A consortium of South Korea-based Glenwood Private Equity and NH PE have sent teaser letters to potential buyers of Tong Yang Magic, in a shift from its previous plan of an initial public offering or pre-IPO investments for the home and kitchen appliance maker which they jointly acquired for 300 billion won ($260 million) two years ago.

According to investment banking sources on June 23, local conglomerates, global companies and other private equity firms had expressed a keen interest in the management rights of Tong Yang, spurring the consortium which has the full ownership of the South Korean company to change the exit plan.

“Since last year, the rental business accounts have been increasing on a stable basis, so the company will be better off over the long term,” an investment banking source told the Korea Economic Daily, referring to Tong Yang’s rental service of water purifiers and bidets. “Given the strong interest from prospective bidders, competition over Tong Yang Magic will intensify.”

The Glenwood-NH PE consortium plans to limit the number of bidders to four to five candidates which would grow Tong Yang Magic with a long-term perspective, the source added.

NH Investment & Securities, an affiliate of NH PE, is advising the consortium on the sale. They are aiming to receive letters of intent as early as August and put Tong Yang up for sale in September, the InvestChosun, an online news outlet, reported on June 28.

“After the sale of Coway fell through last year, Tong Yang Magic has been attracting growing interest,” a source with direct knowledge of the deal was quoted as saying.

“From the perspective of Glenwood and NH PE, it will be advantageous to sell the whole of the company with a management premium.”

Tong Yang Magic was the first acquisition for Sang-ho Lee, an ex-Goldman Sachs banker, as the CEO of Glenwood. Lee is the second son of the former deputy chairman of Samsung Group Hak-soo Lee, and had worked at the finance team of Samsung Electronics, after receiving an MBA from Columbia University. He acquired an investment advisory firm Glenwood in 2014 and grew it as a private equity firm. His elder brother Sang-hoon Lee is currently leading the private equity team of Morgan Stanley’s Seoul office.

After the takeover, the Glenwood-NH PE consortium led Tong Yang to improve the rental business and enhance business efficiency. Last year, Tong Yang reported a 67% surge in operating profit to 38.3 billion won, compared with 2013, a year before it was sold to the consortium. Sales were up 21% to 390.3 billion won during the same period.

Separately, Glenwood PE signed a deal worth 630 billion won to take over Lafarge Halla Cement Corp., a South Korean cement maker, jointly with Baring Private Equity Asia last March from LafargeHolcim Ltd.

 

By Donghoon Lee

leedh@hankyung.com