Korean private equity IMM CS to invest $451 mn for 13% stake in KT Cloud

KT Cloud Co. logo [Courtesy of KT Cloud]

South Korea’s private equity firm IMM Credit & Solutions (IMM CS) will invest 600 billion won ($451.12 million) in KT Cloud Co., to become one of the major shareholders of the cloud and data center spinoff from the country’s telecom giant KT Corp.

According to KT and multiple sources from the investment bank industry on Thursday, KT held a board meeting and approved the 600 billion won investment plan for its subsidiary KT Cloud. The investment will be funded by IMM CS, a private credit fund (PCF) established by Korea’s leading private equity firm IMM Private Equity Inc. in 2020.

IMM CS has 1.2 trillion won assets under management.

Under the plan, KT Cloud will issue 1,328,404 common shares and the same amount in convertible preferred shares to IMM CS at 225,835 won per share.

The corporate value of KT Cloud based on the issuance is estimated at 4.6 trillion won.

IMM CS is expected to secure a 13 percent stake in KT Cloud following the investment. The payment will be made in July. The company plans to guarantee recoup of the funds through an initial public offering.

IMM CS, in the meantime, is known to be creating a project fund worth 600 billion won to secure the funds for the investment. The National Pension Service, the state-run pension fund, has internally made a decision to invest 200 billion won in the fund.

Other major institutional investors including Shinhan Financial Group Co. and Korea Scientists and Engineers Mutual-aid Association are also expected to invest 50 billion won to 100 billion won.

Institutional investors are known to have highly evaluated KT Cloud as it has high and sustainable growth potential as a digital infrastructure stock.