Macquarie PE aims to recoup LG CNS stake investment

Macquarie Group headquarters in Sydney, Australia / Yonhap

By Anna J. Park

Macquarie Korea Opportunities Fund, a closed private equity fund (PEF), aims to retrieve parts of its capital invested into LG CNS through recapitalization, after two years of holding 35 percent of the shares in LG Group's IT solutions affiliate.

According to the investment banking industry earlier this week, the private equity firm recently sent out a request for proposal (RFP) soliciting bids from major banks and securities firms regarding the recap of its 35 percent stake.

Macquarie Korea acquired the stake from LG Corporation in 2020 at a price of 950 billion won ($787 million). Over 63 percent of the money, or some 600 billion won, was raised by acquisition financing at an interest rate of around 3 percent.

Through the recapitalization ― a financing technique of restructuring a company's debt and equity mixture to either obtain new capital or stabilize the company's capital structure ― the PEF plans to retrieve most of the 600 billion won.

LG CNS' positive year-on-year growth backed up the PEF's ambitious recap idea. The firm's cumulative revenue of 2.6 trillion won logged during the first three quarters of last year showed a 22 percent increase from the previous year. Its operating profit saw a 66 percent jump year-on-year to record 200 billion won.

In mid-2019, LG Corporation decided to sell off part of its 85 percent stake in LG CNS, in a move to preemptively respond to a revision of the Fair Trade Act regulating excessive business contracts within a conglomerate structure.