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Pre-IPOs

IMM, four other local PEFs shortlisted for CJ Olive Young pre-IPO

Oct 28, 2020 (Gmt+09:00)

IMM Private Equity and four other South Korean private equity firms have been shortlisted for health and beauty franchise CJ Olive Young’s pre-initial public offering placement.

In the preliminary bidding conducted on Oct. 15, around 10 PEFs, including foreign names such as TPG Capital, submitted their intent to invest in the country’s No. 1 health and beauty franchise.

Of the initial bidders, only local PEFs, including STIC Investments, JKL Partners and Glenwood Private Equity, have been chosen ascandidates for a stake to be offered by CJ Group owner families, according to industry sources on Oct. 28.


CJ Group, parent of CJ Olive Young, has put up some of the shares held by founding family members, including CJ Group Chairman Lee Jay-hyun’s son and heir apparent Lee Sun-ho, alongside the chairman's brother Lee Jae-hwan, in the pre-IPO sale package.

The size of the stake up for sale has not been specified, but will likely be in a range of 20-30%. CJ Group plans to list CJ Olive Young on the local bourse by 2022.

Industry officials said the group likely favored local PEFs over foreign investors in a bid to raise the chances of transactions being completed.

LOCAL PEFs FAVORED

There have been market concerns over the success of the pre-IPO placement since financial investors will have to deal with individual family owners instead of CJ Group. Financial investors are likely to request a shareholders' agreement that will guarantee the IPO or a successful exit before committing to the deal.

There’s also been controversy over the value of CJ Olive Young as its EBITDA has been changed under global accounting rules. Under the new accounting standard, the company's rent for 1,000 stores nationwide will be processed as a non-operating expense, making the operating profit appear higher than its actual amount.

CJ Olive Young, which controls 70% of the local health and beauty market, posted 365.9 billion won ($308.3 million) in revenue with an operating profit of 16.6 billion won in 2019.

Shinhan Investment Corp. and Credit Suisse are the lead managers of the share sale.

Write to Jun-ho Cha and Chae-Yeon Kim at chacha@hankyung.com

In-Soo Nam edited this article.

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