Korean 3D scanning venture draws bids from KKR, Carlyle, Affinity

Medit Corp., a South Korean 3D scanner maker, has drawn preliminary bids from nine private equity firms, including KKR & Co., the Carlyle Group, Affinity Equity Partners and TA Associates, in a rare case that global private equity houses are in competition for a stake in a Korean start-up firm.

The company’s founder and CEO Minho Chang, a Ph.D of MIT and mechanical engineering professor at Korea University, are offering a stake of more than 50% in the world’s third-largest 3D dental scanner maker, in a deal worth more than 300 billion won ($252 million).

“A potential buyer will become the biggest shareholder (in Medit). CEO Chang will co-manage the company as the second-biggest shareholder,” a source with direct knowledge of the matter told the Korean Investors on Sept. 8.

Chang controls 80% of Medit which he set up in 2000. He earned the Ph.D in the area of computer-aided design (CAD) from MIT.

Two Seoul-based investment firms -- Premier Partners and Ryukyung PSA Asset Management Co. Ltd. -- hold the remaining 20% stake.

Until July this year, Chang had planned an initial public offering for Medit and picked Korea Investment & Securities Co. Ltd. as the IPO manager.

But he changed the plan to finding a private equity partner to help the company’s global expansion, according to the source. It derives more than 70% sales from Europe and the US.

Chang excluded strategic investors from the bidding process and limited the candidate pool to global private equity firms, because he wants to remain a co-manager.

VALUATION DOUBLES IN HALF A YEAR

Medit posted a 90% surge in sales to 32.8 billion won in 2018 compared with a year earlier.

Its operating profit came to 10.3 billion won last year.

Some bidders value the company at 600 billion won ($504 million) as a whole, nearly twice its pre-IPO valuation of 361 billion won estimated earlier this year.

Other bidders except for the four PE firms have not been identified.

With a growing adoption of dental 3D printers and scanners, the dental scanner market is expected to continue to grow.

3D dental scanners are used to create digital models of teeth to make prosthetics and dentures. They use CAD technology and 3D printer and take just one hour to produce a denture.

In comparison, the conventional cast denture making method takes more than a week.

Medit started as a manufacturer of high-precision 3D scanners and software for the industrial market and entered the dental scanner market in 2008.

Citigroup Global Markets is handling the stake sale.

By Hugh YH Jeong

hugh@hankyung.com