South Korea’s private equity fund JKL Partners Inc. that was created by the nation’s biggest institutional investor National Pension Service is taking over 70 percent stake in steel building constructor Ker Heung Industrial Co. at 56 billion won ($50.8 million). The investment is expected to deliver high profits as the constructor has solid sale ground and sound financial health.

According to investment bank industry sources on Thursday, JKL Partners signed an agreement to take over 70 percent stake of Ker Heung Industrial at 56 billion won from its major stakeholder and Chief Executive Officer Lee Kyu-seok. Lee currently owns 100 percent stake in the construction company and he will maintain the remaining 30 percent share after the stake sale. He will also participate in the management as a board member.

Ker Heung Industrial was founded in 1993. It manufactures steel works that are used as the frames for large buildings such as skyscrapers, commercial buildings, and industrial plants, and it also constructs steel buildings. It was named as the best steel frame constructor in 2014 and 2015 by the national review of the local constructors. It posted 8.2 billion won in earnings before interest, tax, depreciation, and amortization (EBITA) on sales of 95.7 billion won last year.

Ker Heung Industrial has a strong ability to generate cash based on its excellent financial health and profitability, said JKL Partners. The constructor has a stable customer base and carries a low risk of collecting sales on account as the steel building construction is completed in the beginning phase of a building construction, and this makes Ker Heung Industrial as an attractive investment, added JKL Partners.

The private equity fund has made three investments including the stake buyout of the constructor in just a month. It invested 20 billion won in online and offline hotel booking service operator WithInnovation Corp. And together with Shinhan BNP Paribas Asset Management it acquired 45 billion won-worth convertible preferred stocks issued by golfwear brand Castelbajac.

JKL Partners created a 340 billion won blind pool fund on investments by National Pension Service and others last year, and it successfully has invested over 200 billion won, or over 60 percent of the total fund, in less than a year of creation.

By Kang Doo-soon

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