Korean PE firms' 2021 funds bet on parts makers, dividend stock

IMM Investment Co. and STIC Investments Co., the two most active South Korean private equity firms in 2021 fundraising, made bets on a dividend-focused stock, a smart farm company and electric vehicle battery parts makers last year.

IMM Investment, the country’s No. 4 general manager by cumulative commitments, raised a combined 1.6 trillion won ($1.2 billion) in three funds in 2021, including two infrastructure vehicles, according to the regulatory Financial Supervisory Service (FSS).

One of the 2021 infrastructure funds was mobilized to buy a 49% stake in GS Power Co., the country’s No. 2 combined heat and power generator, for 1 trillion won ($770 million).

Industry watchers said the investment in the power generator was aimed at dividend income. The unlisted GS Group unit paid dividends of 81.5 billion won, or 60% of its 2021 net profit, to its shareholders: IMM and GS Energy Corp.

IMM’s second fund, which raised 971 billion won ($746 million) in 2021, has invested in United Arab Emirates-based agritech startup Pure Harvest Smart Farms, reportedly for $64.5 million.

Last year, IMM Investment posted a 45% on-year jump in commitments to a total of 5.3 trillion won. The Seoul-based PE house has $5.4 billion in assets under management (AUM) as of the end of last year.

STIC INVESTMENTS

With $4.7 billion in AUM, STIC Investments set up four vehicles in 2021 to raise a total of 1.2 trillion won, data from the FSS shows.

Its special situation fund with the 2021 vintage invested 250 billion won in bonds convertible into shares of IMG Technology Co. and 50 billion won in bonds with warrants to buy the latter’s shares.

The investment amount in IMG Technology is half of the 600 billion won STIC’s special situation fund secured in 2021.

IMG Technology manages Iljin Materials Co.’s overseas production lines of elecfoil, a thin copper foil used for cathode electrodes in EV batteries.

STIC’s second 2021 fund, which raised 481.5 billion won, has acquired a stake worth 56 billion won in Shinseung SEC Co., a small-sized domestic EV parts maker.

STIC, South Korea’s fifth-largest investment firm, saw a 36% rise to 4.3 trillion won in aggregate commitments last year.

IMM Private Equity, the country’s No. 3 general manager, purchased a 27.7% stake in Hanssem Co. for 1.44 trillion won, jointly with Lotte Shopping Co. As a limited partner, Lotte poured 259.5 billion won into the STIC vehicle used for the purchase.

Hanssem is South Korea’s top furniture and home furnishing company. But its share price is down more than 25% since STIC closed the deal last March.

IMM Private Equity raised a combined 483 billion won through three funds last year.

Earlier this year, IMM PE invested 200 billion won in the country's largest cloud service provider Megazone Cloud Corp., into which MBK Partners injected the same amount to join Megazone's latest funding round.

In contrast to IMM Investment, IMM PE and STIC Investments, MBK and Hahn & Co., the two largest PE firms registered in South Korea, did not launch new funds in 2021.

Write to Tae-Ho Lee at thlee@hankyung.com
Yeonhee Kim edited this article