The competition to take over South Korea’s leading industrial gas supplier Daesung Industrial Gases Co. has been narrowed down to three private equity funds.

According to the investment banking industry on Thursday, Korea’s MBK Partners, U.S.-based TPG Capital LP and Hong Kong-based PAG have submitted their bids for Daesung Industrial Gases owned by Goldman Sachs with a 62 percent stake and Daesung Group Partners Co. with a remaining 38 percent during the main auction held on the same day. Full stake is placed up for sale.

A source from the investment banking industry said that strategic investors from home and abroad including SK and U.S.-based Air Products and Chemicals Inc. had dropped out of the race with the sale price running higher than their expectations.

Contrary to them, the three investment firms with deep pockets reportedly expressed their strong will to take over the gas supplier. Market experts estimated that they would have offered up to about 1.5 trillion won ($1.3 billion) for the acquisition.

Shares of Daesung Industrial Gases finished Friday at 4,375 won, up 0.68 percent or 30 won, from the previous session.

MBK Partners established a new fund worth $4.1 billion late last year, and TPG and PAG hold a respective of $3.3 billion and $3.7 billion fund dedicated for investment in Asia. They all boast strong finance as global institutional investors are increasingly betting on private equity funds in search for high returns in a prolonged low-interest rate environment. They have been fiercely seeking to invest in companies with sound liquidity like Daesung Industrial Gases to raise profit.

Daesung Industrial Gases recorded 53.9 billion won in operating profit on sales of 581.1 billion won in 2015 versus 24.1 billion won and 470.8 billion won respectively in the previous year. Considering that the company raked in 47.6 billion won in operating profit and 383.6 billion won in sales during the January to September period last year, it is estimated to have raked in 63.7 billion won in operating profit on sales of 513.8 billion won for the full 2016.

The sale process is also expected to speed up as Daesung Group Partners’ key affiliate Daesung Industrial Co. has to pay off bonds worth a total of 245.5 billion won maturing in March and April. Daesung Industrial is urgent to raise money from Daesung Industrial Gases’ sale as it would be difficult for the company to extend the maturity of its debts due to the poor financial performance. The sale is expected to be completed by April at the latest.

By Kang Doo-soon and Han Woo-ram

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