STIC Investments to cash out of Daekyung O&T, Median Diagnostics

South Korea’s private equity firm STIC Investments Inc. is readying to cash out of companies it has helped to groom in new technologies – biodiesel specializing Daekyung O&T Co. and animal diagnostic kits developer Median Diagnostics Inc.

The two companies have named their sale advisors in the first half and are tapping potential buyers to receive final bids next month to complete the entire sale process within the year, according to investment banking sources on Monday.

Daekyung O&T, which engages in producing vegetable and animal oils and fats, recently has expanded its business into supply of biodiesel materials and acquired carbon dioxide emissions permits, grabbing attention from big conglomerates active in the environmental, sustainable and corporate governance (ESG) drive.

STIC Investments acquired the biodiesel company for 94.5 billion won in 2017. Since then, Daekyung O&T’s operating profit expanded to 16.5 billion won last year from 6.4 billion won, with sales surging to 331.4 billion won from 231.6 billion won. When counting in the ESG premium, the sale price could reach at 250 billion won.

Bank of America Merrill Lynch underwrites the deal. Up for sale is the entire stake in Daekyung O&T, of which 70 percent is owned by STIC Investments and the rest by the former CEO and others.

Median Diagnostics trading on the smallest and venture-focused Konex market is the country’s No. 1 animal diagnostic kits supplier founded in 1999. With a market share of above 50 percent, the company reported an operating profit of 2.3 billion won last year, soaring 283 percent on year, with sales up 13 percent to 13.8 billion won.

The sale involves a 71.73 percent stake owned by STIC Investments plus management right. The sale price is estimated at 50 billion won, considering the market cap of 60 billion won.

STIC Investments is fine-tuning the contract terms for the sale with potential buyers at home and abroad with an aim to proceed with the sale as a private deal, not in a bidding process.

“Both the two companies are market dominants with technical power in Korea and thus, the management premium will be set at higher level if a public tender will take place,” said an investment banking source.

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