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Hahn & Co. to buy SK Chemicals’ biofuel operation for W382.5b

Feb. 5, 2020 - 14:21 By Son Ji-hyoung
Courtesy of SK Chemicals
Seoul-based private equity house Hahn & Co. agreed to buy SK Chemicals’ biofuel operation for 382.5 billion won ($322.2 million) in cash on Wednesday.

The proposed acquisition of South Korea’s No. 1 biodiesel producer marks the first deal to be announced since Hahn & Co. closed a new Korea-focused fund worth $3.2 billion in October last year, a Hahn & Co. official said. As of end-2018, SK Chemicals took up one-third of market share here by biodiesel production.

This comes as SK Chemicals looks to secure cash for investment in new business opportunities and concentrate on key business sectors, ranging from heat-resistant copolyester to vaccines and arthritis treatment.

SK Chemicals is SK conglomerate’s business arm dedicated to green chemicals and life science. SK Discovery is its largest shareholder with 33.47 percent ownership as of end-September.

SK Chemicals’ biofuel operation is part of its green chemicals division, which develops and sells copolyester, engineering plastics, coating materials and adhesive materials.

The business unit has produced biodiesel for transport sectors and biofuel for power generators, under the “Ecoprime” brand. Its assets came to 132.5 billion won, or one-tenth of SK Chemicals’ green chemicals division, while the unit generated 277 billion won in revenue for 2018, or one-fifth of SK Chemicals.

Samil PricewaterhouseCoopers valued the business unit, using the discounted cash flow technique.

The acquisition deal is expected to close on May 31 if SK Chemical shareholders approve the deal in an extraordinary meeting in March.

SK Chemicals’ stock trading on the main bourse Kospi was suspended temporarily Wednesday morning until 9:30 a.m. Its common shares were trading 16.8 percent higher than the previous day’s close as of 11:40 a.m.

Hahn & Co. is the second-largest private equity firm of Korea, with assets under management at $6.7 billion as of October. Founded in 2010, Hahn & Co. is led by Chief Executive Hahn Sang-won, a former chief investment officer at Morgan Stanley Private Equity Asia.

Its portfolio companies include automotive thermal management solutions firm Hanon Systems, Ssangyong Cement Industrial, Magna International’s fluid pressure and controls operation, dry bulk carrier H-Line Shipping and wet tanker carrier SK Shipping. Companies controlled by Hahn & Co. generate revenues of approximately $10.9 billion with over 29,000 employees globally.

By Son Ji-hyoung (