South Korea’s Lotte Group has joined hands with a consortium of two private equity funds to resume the acquisition of Hyundai Logistics Co. that was put on hold in May due to prosecutorial probe into the family-owned conglomerate.

According to multiple sources from the investment bank industry on Thursday, Woori Private Equity (Woori PE), a private equity arm of Woori Bank Co., and Orix Private Equity Korea Corporation (Orix PE Korea), a subsidiary of Japan’s Orix Corporation, will jointly set up a new 100 billion won ($87.6 million) worth private equity fund with Lotte Group to buy Hyundai Logistics.

Woori Bank will lead the acquisition as the anchor investor by investing 49 billion won in the fund while the remaining 51 billion won will be invested by local institutional investors. The fund will be managed by Woori PE and Orix PE Korea.

Lotte Group had been putting out efforts in May to acquire Hyundai Logistics with an aim to settle final agreement in July. The process, however, was halted due to the prosecution’s investigation into the conglomerate and its chairman Shin Dong-bin on charges of embezzlement and breach of trust. The conglomerate started to promote normal operations after its chairman was relieved of detention in September.

The largest shareholder of Hyundai Logistics is Igis 1 Corporation with 88.8 percent ownership and management is controlled by Japan’s Orix. Igis 1 Corporation is a special purpose company that was set up based on 35 percent investment by Orix, 35 percent by Lotte Group, and 30 percent by Hyundai Merchant Marine Co.

Lotte Group is expected to invest about 500 billion won to buy 71 percent stake.

Japan’s Orix and the Woori-Orix PEF will form a consortium and re-invest 130 billion won worth of funds to acquire 17.8 percent stake. Management control will be transferred from Orix to Lotte Group.

Hyundai Logistics is a general logistics company that provides parcel, shipping, and aviation distribution services. It is currently the second-largest logistics company by market share after CJ Korea Express Co. Lotte’s investment comes at a time when Korea’s logistics industry has been growing with the rising popularity of online shopping. Its corporate value is expected to increase based on synergy from the upcoming acquisition by Lotte Group.

By Kang Doo-soon and Han Woo-ram

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