South Korean conglomerate LS Group will sell its automotive electronic parts making unit LS Automotive Corp. to the United States-based private equity firm KKR & Co. L.P as a part of efforts to improve its financial health.

According to investment bank industry sources on Tuesday, LS Group decided to sell entire 100 percent stake in LS Automotive to KKR at around 1 trillion won ($884 million) on an enterprise value basis and planned to make a formal announcement soon.

LS Automotive, whose 100 percent stake is owned by the group’s machinery making unit LS Mtron Ltd, is an automotive electronic parts maker, and it commands the largest share in the local automotive switch and relays market. Its operating income for full 2016 nearly doubled to 62.8 billion won on sales of 911.0 billion from a year ago period and its earnings before interest, taxes, depreciation and amortization (EBITA) reached 113 billion won last year. But it has suffered from high debt ratio of 261 percent due to massive loans.

LS Group has extended its efforts to improve its overall financial well-being since 2015. It raised 54 billion won in cash by listing LS Cable & System Asia Ltd on local stock market last year and it has placed eBest Investment & Securities Co., a mid-sized security firm up for sale with a hope to secure additional cash amounting nearly 300 billion won. The group picked local savings and loans institution Apro Service Group as a preferred bidder for the security firm last month and has been negotiating the sale term.

The group has tried to sell off LS Automotive since 2015 but turned around its plan in April last year to seek the initial public offering of the automotive electronic parts maker after it failed to agree on a sale price with potential buyers. But the group changed its direction again to sell LS Automotive to KKR who reportedly recognized the growth momentum of the automotive electronic parts market.

By Kang Doo-soon and Han Woo-ram

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]