South Korea’s private equity fund Glenwood Private Equity Fund and NH Investment & Securities Co. have embarked on selling Tongyang Magic Inc. just two years after they jointly acquired the country’s home and kitchen appliance maker. The value of Tongyang Magic is expected to amount to more than 400 billion won ($341.6 million), surpassing about 310 billion won that they spent to buy the company in 2014.

According to sources on Tuesday, the Glenwood-NH consortium (NH PE) already sent a teaser letter to tap interest of potential investors. The NH PE aims to receive a letter of intent from probable bidders by next month and hold a main auction before mid-September. The consortium is said to be looking for a new owner who can foster the growth of Tongyang Magic as a global kitchen appliance manufacturer with a long-term vision, and is expected to shortlist between four and five potential bidders with strong interest.

Major local retail companies and PEFs are emerging as possible candidates. Lotte Group was known to be highly interested in acquiring Tongyang Magic, but the ongoing large-scale prosecution probes into Lotte Group for slush fund allegations are hampering the group’s focus on business M&A. Market watchers expect Korea’s other retail giants and large PEFs like MBK Partners and IMM PE would be in the shortlist. Some potential bidders are known to have already contacted the NH PE to deliver their intent in possible acquisition of the appliance maker even before Tongyang Magic was officially put on sale.

Tongyang Magic’s earnings have improved sharply since it was taken over by the NH PE in 2014. Tongyang Magic posted 38.3 billion won in operating profit and 390.3 billion won in sales in 2015, up 67 percent and 21 percent, respectively, from 2013. Such remarkable improvement was mainly driven by its strong rental business and improvement in operational efficiency.

By Kang Doo-soon, Kim Hyo-hye

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