MBK eyes stake in Korean software developer Tmaxsoft

North Asia-focused private equity firm MBK Partners is eyeing shares of South Korean enterprise software developer Tmaxsoft Co. around two years after the PE house failed in its takeover bid, banking sources said on Thursday.  

MBK executives have recently met Tmax Group founder and Chair Park Dae-yeon to express the PE firm’s intention to buy the software developer, sources added.

The PE house plans to back Tmax Group to exercise a call option to buy back Tmaxsoft shares from Seoul-based Skylake Equity Partners, the owner of the software developer. Following the call option exercise, MBK will acquire Tmaxsoft shares at a premium.

But the plan faces a bumpy road as Cactus Private Equity, a key stakeholder of Tmax Group, has the priority to buy shares of the group’s former unit Tmaxsoft. 

CALL OPTION

MBK joined a bid with Skylake and Korean cloud management platform operator Bespin Global to acquire Tmaxsoft in late 2021. Skylake won the bid and bought a 60.9% stake in Tmaxsoft for 560 billion won ($407.7 million) from Tmax Group in March 2022. 

At the time, Tmax Group received a call option to buy back Tmaxsoft shares for two years from March 15, 2024.

To buy backTmaxsoft shares back through the option, Tmax Group plans to raise a maximum of 1 trillion won from Cactus via data management affiliate Tmaxdata’s rights offering.   

Several PE managers have proposed Cactus jointly create funds for the rights offering, according to banking sources. Cactus plans to complete the funding in the first half of this year, sources said.

CHALLENGES

There are hurdles for MBK to partner with Tmax Group and buy the software development firm.

Market insiders say that it is unlikely that Chair Park will again sell Tmaxsoft, the top player in the Korean middleware market, following the deal. After the group sold Tmaxsoft in 2022, Park had a strong will to eventually get it back, according to industry sources.  

Cactus is said to have a priority to join the deal process based on the partnership between the PE firm and Tmax Group, sources said. Cactus invested 100 billion won to improve the group’s financial conditions last year.

Tmaxsoft is a cash cow, garnering attention from private market investors. The software company posted 156.1 billion won in revenue last year, up 5.3% on-year. The firm’s net profit jumped 34.2% on-year to 58.8 billion won last year.

Write to Jong-Kwan Park at pjk@hankyung.com

Jihyun Kim edited this article.