[THE INVESTOR] In the first case of its kind, two international private equity funds have approached the Hong Kong International Arbitration Center over the sale of Logen, a South Korean parcel delivery firm, Korean media reported on Jan. 25.
Hong Kong-based private equity fund Baring Private Equity Asia, which fully owns the Korean delivery company, requested a dispute resolution on Jan. 24 after CVC Capital Partners sought to cancel its 330 billion won (US$282.82 million) deal to acquire Logen in September.
CVC claims that it was not fully informed about the finances of KGB Logistics, which merged with Logen in 2015 before signing the deal. According to reports, Logen’s liabilities rose to 60.6 billion won in 2015 from 26.4 billion won in the previous year after acquiring the South Korean logistics company.
“We provided all information during the due diligence period. We can’t cancel the contract,” an official from Barings Asia said.
As the International arbitration is based on a single-trial system, the process is expected to take a shorter period than a general trial -- which takes two or three years if prolonged depending on an issue.
Experts predict that the ruling of the arbitration center may have a huge impact on the M&A market. If the arbitration center rules in favor of CVC Capital Partners -- canceling a deal or reducing a contract cost -- a series of meditation requests may follow, they said.
By Park Yuna (firstname.lastname@example.org)