April 25, 2024

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[THE INVESTOR] Morgan Stanley Private Equity Asia is considering divesting its stake in South Korea’s tissue paper and diaper maker Monalisa and its affiliate Ssangyong C&B which it acquired in 2013, sources said on Jan. 5.

MSS Holdings, an investment holding unit of Morgan Stanley PE, is currently working on a package deal to sell its entire stake in the two companies and will soon hire managers for the sale. 

“The largest shareholder is reviewing the stake sale but nothing has been confirmed yet,” Monalisa said in a regulatory filing on Jan. 4.

Market insiders estimate that the private equity firm expects to sell the duo for about 300 billion won. 

On the reports about the sale plan, Monalisa shares surged over 17 percent over the past two days to trade at 8,100 won (US$6.87) at 1 p.m. on Jan. 5.

According to people familiar with the matter, Chinese and Indonesian companies are showing interest in the deal, particularly Jakarta-based Asia Pulp & Paper, better known as APP.

Acquiring the two companies could help APP to crack other Asian markets including China with cheap raw materials from Indonesia.

When combined, Monalisa and Ssangyong C&B are ranked third in the country’s hygiene paper market, following Yuhan-Kimberly and KleanNara.

The two companies are also expanding their product portfolio to adult diaper and premium baby nappies, targeting the growing demand for baby products from Chinese consumers.

Monalisa’s decreasing earnings can be an obstacle to a profitable exit. It reported operating margin of 4.99 percent in 2015, compared to 7.28 percent in 2013.

In 2013, Morgan Stanley bought Monalisa and Ssangyong C&B for around 200 billion won from Kim Kwang-ho, former CEO of Monalisa

SSangyong C&B is an unlisted entity that was established by Kim after he bought a bathroom tissue producing business from SSangyong Paper in 2005.

By Park Han-na (hnpark@heraldcorp.com)