[Funding] LB PE Secures Acquisition Funds for Ship Transformer Manufacturer 'KOC Jeon-gi'

Underwritten by Shin Young Securities, 26 Billion Won Acquisition Financing Raised
100% Stake Acquired for Approximately 50 Billion Won
SkyLake Recovers Investment Through Large Dividends and Stake Sale

[Asia Economy Reporter Lim Jeong-su] LB Private Equity (LB PE), an operational private equity fund management company, has completed the financing for the acquisition of KOC Electric, a shipbuilding and offshore plant transformer manufacturer based in Busan. The previous major shareholder, Skylake, recovered its investment through large-scale dividends exceeding net profit and share sales.

According to the investment banking (IB) industry on the 3rd, LB PE raised approximately 26 billion KRW in acquisition funds for KOC through Transformer Holdings, a special purpose company for mergers and acquisitions (M&A). Shin Young Securities is known to have led the acquisition financing and recruited investors.

The raised funds will be used for acquiring KOC Electric. LB PE agreed to acquire 100% of KOC Electric’s shares for about 50 billion KRW. With the acquisition financing secured, most of the acquisition procedures have been completed. Aside from the acquisition financing, the remaining approximately 25 billion KRW needed for the share acquisition is understood to have been prepared from private equity fund contributions.

KOC Electric was acquired by Skylake, founded by former Minister of Information and Communication Jin Dae-je, who purchased a 73.4% controlling stake for 77 billion KRW in 2015. Subsequently, in 2019, Skylake acquired the remaining approximately 27% held by individual shareholders including the original owner family, thus holding 100% of the shares.

During Skylake’s ownership, KOC Electric’s scale shrank due to declining sales amid the worsening shipbuilding industry conditions. As a result, Skylake had to put its shares on the market at a price far below the acquisition cost.

An industry insider analyzed, "Although Skylake recovered more than 20 billion KRW through interim and year-end dividends after acquiring KOC Electric, some losses appear inevitable even considering this."

KOC Electric has recently shown signs of bottoming out and slight improvement in performance as the shipbuilding industry conditions have started to recover gradually. Sales, which had decreased to around 40 billion KRW, have grown to the 50 billion KRW level, and operating profit increased from about 300 million KRW to 1.8 billion KRW.

Its financial capacity remains weakened. When Skylake acquired KOC Electric, it held around 30 billion KRW in cash equivalents, but due to dividends exceeding net profit, the cash equivalents decreased to about 3.6 billion KRW by the end of last year.

This content was produced with the assistance of AI translation services.