Korean military fund invests in UK motorway service chain

  • 2019-06-12

The Military Mutual Aid Association (MMAA) has invested 40 billion won ($34 million) to buy a minority stake in Welcome Break, the UK’s second biggest motorway service station operator,  further diversifying its infrastructure-type asset portfolio for stable returns.

MMAA’s board approved the investment last week to buy a stake of around 3% in the UK service station chain from Korea Investment& Securities Co. Ltd., local news provider MoneyToday reported on June 7. Investment banking sources confirmed it.

Korea Investment & Securities has been selling down its 5.6% stake in Welcome Break since it acquired the equity interest for 68 billion won last year from South Korean private equity firm Aarden Partners.

It was Korea Investment’s first equity investment in a foreign company sourced by a domestic private equity house.

On top of the 40-billion-won stake sale to MMAA, a $9 billion military retirement fund, Korea Investment has sold an additional stake to an unidentified domestic institutional investor for 15 billion won, according to sources with knowledge of the matter on June 11.

It holds the remaining stake worth 13 billion won.

Financial details such as expected returns and investment period have yet to be disclosed.

Currently, Dublin-based Applegreen plc has a 50.01% controlling stake in Welcome Break.

Seoul-based Aarden Partners had acquired the 5.6% stake through one of two funds managed by Arjun Infrastructure Partners (AIP) which had a stake of 49.99% in the UK motorway service area chain.

The UK-based AIP manages two funds for Welcome Break – WB Investors LP and WB Investors II LP.

Along with the South Korean private equity house, Denmark’s Laegernes Penson and West Midlands Pension Fund of the UK committed to the latter as limited partners, according to MoneyToday.

Korea Post committed to the former in 2017.

Welcome Break owns 35 motorway service stations in the UK and attracts an estimated 85 million motorway customers per year.

Its low sensitivity to economic cycles has lured Korean institutional investors into the equity interest.

The company generated revenues of 720.1 million pounds and adjusted EBITDA of 65.6 million pounds in the year ended 31 January 2018.

Applegreen said on June 5 that ongoing uncertainty surrounding Brexit has impact on consumer sentiment, but the performance of Welcome Break has been satisfactory despite more challenging trading conditions in 2019.

By Hyunil Lee

hiuneal@hankyung.com

<Edited by Yeonhee Kim>

(Photo: Getty Images Bank)