Korea’s M&A market to total more than $16 bn this year

[Photo by MK DB]

South Korea’s merger and acquisition (M&A) market is expected to total more than 22 trillion won ($16.6 billion) this year, with major private equity funds (PEFs) poised to use the proceeds from the sales for other acquisitions of firms and businesses.

According to multiple sources from the investment bank industry on Thursday, M&A deals being led or planned by PEFs are estimated to be worth 22 trillion won.

The deals include the sale of a majority stake in AirFirst Co. owned by Korea’s IMM Private Equity, which is expected to be worth 1 trillion won, and Jeonju Paper Corp., Korea’s leading newsprint producer, worth 800 billion won.

There are also deals involving the sale of Lotte Non-Life Insurance Co. and mobile ticket-booking platform Yeogi Eottae.

Some PEFs will likely resume the sales of its portfolio after a sluggish season in the face of rising interest rates and uneasy market conditions.

Sales of Hanon Systems worth 7 trillion won and Lotte Card Co. worth 2 trillion won are likely to resume.

“We are scaling down the existing portfolios to seek more investment opportunities,” said an official from an unknown private equity firm.

Market insiders expected a record-high rally for the M&A market this year, as soaring interest rates forced many PEFs to stop their sales of stakes last year.

The upbeat outlook for the country’s M&A market comes as PEFs are seeking additional acquisitions using the funds secured through their sales. Overall transactions are expected to more than double this year from last year.

“A race for acquisitions can be more active than expected as the rise in restructuring activity for non-core business units of large corporations and layoffs of small and mid-sized companies have lifted demand related to M&A deals,” said an unnamed source from the investment banking industry.