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Private equity

Morgan Stanley PE cashes in on coronavirus spread in Korea

Feb 24, 2020 (Gmt+09:00)

Morgan Stanley Private Equity has pocketed around 19 billion won ($16 million) in gains by cashing out a portion of its shares in a South Korean mask and tissue paper maker so far this month, becoming one of the few beneficiaries of the spreading coronavirus in the country.


Shares in Monalisa Co. Ltd., in which Morgan Stanley PE had held 66% before the profit taking, have jumped nearly 130% to 8,220 won since the beginning of the year by the market close on Feb. 21. It had climbed to as high as 9,790 early this month.


In comparison, the broader KOSPI slipped 1.5% during the same period.


Morgan Stanley PE has reduced its stake in Monalisa to 51% from 66% in three rounds of public market trade in February alone, according to investment banking sources on Feb. 24.


As the number of confirmed coronavirus cases topped 700 in South Korea on Feb. 23, the government raised the alert level to its highest and postponed the opening the spring semester by one week to March 9.


Seoul-based STIC Investments Inc. has invested in the Korean manufacturer of protective masks and suits and respirators, Sanchung.


Other private equity houses likely to take advantage of the virus outbreak are KKR and Baring Private Equity Asia as they are seeking to exit online shopping platform TMON Inc. and delivery service firm Rogen Co. Ltd., respectively.


Baring put unlisted Rogen, in which it owns the entire stake, back on the market in late 2019, three years after its attempt to sell the small parcel delivery firm failed. It is estimated to fetch 300 billion won.


IMPACT ON EXIT FROM FOOD COMPANIES


On the flip side, the virus epidemic could further delay Morgan Stanley PE’s divestment from the loss-making Korean-style restaurant chain Nolboo as a more number of South Koreans are refraining from eating out.


Since the US private equity arm invested around 120 billion won to buy 51% of Nolboo in 2011, the restaurant operator has accumulated losses because of falling sales.


Other restaurant and coffee franchises up for sale in Korea include Mad for Garlic owned by Affirma Capital, formerly Standard Chartered Private Equity and Hollys Coffee by IMM Private Equity.


Their previous attempts to exit the Korean food and beverage companies fell through because of price differences.


Affinity Equity, which has invested in SSG.COM, a Korean retail giant’s online platform, is expected to put Burger King Korea on the market after combining it with its Japanese operation which Affinity acquired last year.


It had spent about 220 billion won to buy the fast food company’s operations in both Korea and Japan between 2016 and 2019.


By Chaeyeon Kim


why29@hankyung.com



(Photo: Getty Images Bank)

Yeonhee Kim edited this article

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