Brookfield likely to beat KKR for $800 mn Korean gas facility

Brookfield Asset Management has entered talks with South Korea's SK Materials Airplus Inc. to buy the latter's industrial gas facility, after its preferred buyer KKR & Co. is struggling to raise money for the deal worth about 1 trillion won ($770 million), according to sources familiar with the matter.

Brookfield and KKR are among the three shortlisted bidders, including Macquarie, for the plant, within a one-hour drive from Seoul.

In early May, KKR was chosen as a preferred buyer of the facility. As a deal signing was being delayed, however, SK turned to Brookfield despite KKR's request for re-negotiations, the sources said on Aug. 5.

Brookfield plans to decide next week on the purchase at its internal investment review committee.

SK will sign a share purchase agreement with Brookfield shortly after the Brookfield committee gives a nod to the investment.

The Toronto-based investment firm is understood to have already raised 1 trillion won to fund the purchase.

However, KKR has not backed down yet. If Brookfield’s investment committee rejects the investment, it intends to sweeten its bid, according to the sources.

The industrial gas facility up for grabs was built in 2021 within the semiconductor manufacturing complex in Icheon of SK Hynix Inc., the world's No. 2 memory chipmaker. 

It is one of SK’s main gas production facilities, including one located at its headquarters in Ulsan, North Gyeongsang Province.

SK Materials Airplus is wholly owned by SK Inc. It produces industrial gases by refining oxygen, nitrogen and argon to supply them to companies in the semiconductor, petrochemical, steel and medical industries.

Despite being a latecomer in the industry, it has been a major supplier to its sister companies, including SK Hynix, SK Energy and SKC.

If the deal goes through, it will mark Broofield’s first large-scale investment in South Korea since its 2.6-trillion-won purchase of IFC complex in central Seoul six years ago.

Back in 2016, Brookfield acquired IFC Seoul from the AIG Group in its first real estate purchase in Korea. 

Earlier this year, the Canadian asset manager sold the real estate to Seoul-based Mirae Asset Group at the low end of the 4 trillion range, which generated about a 60% return.

Last year, Brookfield hired Jun Park, a top manager of Seoul-based private equity firm Hahn & Co., as head of its South Korean operations.
 
Write to Chae-Yeon Kim at why29@hankyung.com
Yeonhee Kim edited this article