Baring, KKR, Anchor stepping away from exits through IPOs

Logen, TMON less likely to be listed on market in near future

By Park Jae-hyuk

Baring Private Equity Asia (BPEA), KKR and Anchor Equity Partners appear to be backing away from their plans to exit their portfolio companies in Korea through initial public offerings (IPOs).

The foreign private equity firms (PEFs) had been expected to capitalize on the IPO fever in the wake of the recent stock market rally, although it has been difficult to witness the successful listing of companies owned by PEFs on the Seoul bourse.

While BPEA was trying to list Logen on the benchmark KOSPI market, TMON, which has KKR and Anchor as its two largest shareholders, made an official announcement that it would go public within this year.

According to industry sources, however, BPEA selected Dae Myung Chemical last month as the preferred buyer of a 100 percent stake in the logistics firm worth 300 billion won ($262 million). The potential buyer is expected to wrap up due diligence this week and sign a contract with the seller this month at the earliest.

After taking over Logen in 2013, BPEA failed to sell the company to CVC Capital Partners in 2016 and to Shinsegae Group last year. Although the Hong Kong-based PEF has also pursued an exit through an IPO as an alternative, the plan has not been successful so far.

Market insiders expect BPEA to stop its attempts to list Logen, once the Korean company is sold to Dae Myung, a North Gyeongsang Province-based company specializing in fashion and logistics.

A Logen official declined to confirm the deal, saying the decision on the sale of the company is definitely up to its largest shareholder.

TMON's largest shareholders are also facing questions about their intentions to list the e-commerce firm, after a series of resignations of its top executives in recent months.

Last month, TMON co-CEO Jon In-chon resigned as its director just a month after he was picked as the successor to former CEO Lee Jin-won, who left the company in May. Another former CEO Yoo Han-ik, who was serving as the board chairman, also left TMON in June.

Market observers have speculated that KKR and Anchor may be trying to capitalize on the recent popularity of e-commerce companies in the local M&A market.

TMON was once rumored to be sold to Lotte Group in 2017 and again in 2019. Lotte recently considered buying eBay Korea, which was eventually sold to its rival, Shinsegae Group.

A TMON spokeswoman said the company will continue to prioritize the IPO plan, adding that Jon will continue to lead the company as co-CEO along with Jang Yoon-seok. But at the same time, she did not rule out the possibility of TMON's largest shareholders selling the company.

Anchor, one of TMON's two largest shareholders, had tried to list another of its portfolio firms here, A Twosome Place, earlier this year, but finally withdrew the plan last month, amid growing doubts about the coffeehouse chain's valuation.

Although NH Investment & Securities, KB Securities and Samsung Securities participated in a bid to be selected as IPO underwriter, the deal failed to draw attention from other major players, such as Mirae Asset Securities and Korea Investment & Securities.

The Hong Kong-headquartered PEF is expected to seek to sell its stake in A Twosome Place later, after making some efforts to expand its presence for a while.

Impact on Mirae Asset

If the foreign PEFs eventually drop their plans to list Logen and TMON, this could have a negative impact on Mirae Asset which has been handling the deals as an underwriter. IPO underwriters in Korea tend to get paid once the deal is successfully completed. They receive nothing when firms give up their plans to go public here.

In that case, the securities firm will need to make more efforts to enable the successful listings of domestic PEF-owned companies in order to improve its track record. Mirae Asset is currently serving as an underwriter for the listing of H-Line Shipping owned by Hahn & Company and Junjin Construction and Robot owned by Well to Sea Investment.

PEFs have tended to prefer sales of their portfolio companies over IPOs, because the former enables them to make divestments in a short period of time. Investors have also remained reluctant to bet on PEF-owned listed companies to avoid their money being used to profit PEFs, instead of for long-term growth of the companies in which they invested.