Blackstone Group L.P., a New York-based global asset manager, is said to be mulling a buyout of South Korea’s leading industrial gas suppler Daesung Industrial Gases Co., which would be the U.S. investment firm’s first attempt to acquire management control of a Korean firm if it joins the race.

According to multiple sources from the investment bank industry on Thursday, Blackstone has recently selected Bank of America (BOA) Merill Lynch as its deal adviser and is reviewing whether it should take part in the bidding for Daesung Industrial Gases, which produces industrial gases such as nitrogen and oxygen. The preliminary auction is scheduled for early next month.

An unnamed official from the investment bank industry said that Blackstone received the deal materials from BOA Merill Lynch under a non-disclosure agreement and has been in contact with commercial banks to secure purchasing funds.

The full stake in Daesung Industrial Gases up for grabs is estimated to value around 1.5 trillion won ($1.27 billion), becoming one of the largest merger and acquisition deals in Korea this year. Major companies from home and abroad including SK Group and private equity funds are considered as potential buyers. Among them, SK Group that has an advanced materials producing unit SK Materials Co. is considered a strong contender.

This is the first time for Blackstone is attempting to buy management control in a local firm. Since it first entered Korea, it has been mainly invested in share ownership.

Blackstone, a major global private equity fund along with Kohlberg Kravis Roberts & Co. L.P., The Carlyle Group, and TPG Capital L.P., currently has over $100 billion assets under management for private equity investment, plus additional $44.8 billion. It has stakes in 81 corporations across the globe including that of luxury brand Gianni Versace SpA, camera maker Leica Camera AG, and First Eagle Investment Management LLC, an asset manager well-known in Korea as the third-largest shareholder of KT&G Corp.

Market observers noted that Blackstone has been preparing to invest in Korean companies long before by realigning its investment workforce. Blackstone recently relocated representative Cook Eugene to Hong Kong to be in charge of Korea investment. Blackstone has no office in Seoul.

By Kang Doo-soon and Han Woo-ram

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