[THE INVESTOR] Woongjin Group announced on Oct. 29 that a consortium led by it will buy back water purifier rental firm Coway, which it had sold in 2012, for 1.68 trillion won (US$1.47 billion).
The consortium formed by Woongjin Thinkbig and Korean private equity firm STIC Investment, has reportedly signed a stock purchase agreement for 22.17 percent stake in Coway with the current owner, private equity firm MBK Partners.
Woongjin Group Chairman Yoon Seok-geum
“We thought that rental business has a bright future. More and more customers are renting products instead of buying them. That is why we decided to reacquire Coway,” Woongjin Group Chairman Yoon Seok-geum said during a press conference.
“As a financial investor, we plan to actively contribute to Woongjin Thinkbig and Coway’s growth,” a STIC Investment official said in a statement. According to Woongjin Group, STIC Investment will contribute around 500 billion won, while it will invest around 400 billion won. The remaining funds will be financed through loans.
“We do understand that 22.17 percent stake is not enough to manage the company stably. So, we are also considering securing additional shares as our long-term plan,” Woongjin Group Executive Director Ahn Ji-yong said. Furthermore, Woongjin also said there will not be any major changes to the company’s management.
“The rental business is growing at around 10 percent on average each year in Korea. So, we aim to grow at around 7-8 percent,” Ahn added.
Established in 1989, Coway was the first company to use a rental business model to sell water purifiers and air cleaners here. Woongjin, which was once ranked as one of the top 30 conglomerates in Korea, fell into crisis in 2007 after acquiring constructing firm Kukdong E&C. The company was put under court receivership in 2012 as its debt reached 1.44 trillion won. The group sold its entire stake in Coway to private equity firm MBK Partners for 1.2 trillion won in 2012, with rights of first refusal.
By Song Seung-hyun(firstname.lastname@example.org