Baring Private Equity Asia is in the final stages of talks with a South Korean private equity firm to sell the country’s No. 4 parcel delivery company Logen Co. Ltd. for slightly over 300 billion won ($250 million).
If the deal goes through, Hong Kong-based Baring PE Asia will divest its 100% stake in Logen to Well to Sea Investment, according to investment banking sources on June 28.
Well to Sea Investment is in separate discussion with an unidentified Korean strategic investor to cooperate in the acquisition, the sources added.
The prospective sale will likely return about 1.5 times the original investment Baring PE made for the purchase of Logen in 2013 and the bolt-on acquisition of smaller rival KGB LOGIS Co. Ltd. in 2015.
Its previous attempts to sell Logen to CVC and UPS had faltered. CVC terminated an agreement in 2016 to buy the parcel delivery company.
But Baring PE resumed the sale process late last year, which got a momentum from a surge in parcel volumes since the coronavirus outbreak.
The price tag of slightly over 300 billion won was little changed from what CVC was expected to pay in 2016. But Baring PE reportedly had demanded 400 billion won for Logen.
Logen controls about 10% of South Korea’s parcel delivery market, trailing CJ Logistics Co. Ltd., Hanjin Transportation Co. Ltd. and Lotte Global Logistics Co. Ltd.
This year, its operating profit and revenues are expected to significantly rise from last year’s 24.3 billion won and 442.6 billion won, respectively. Its operating profit was 5.5% last year.
Unlike bigger South Korean parcel delivery firms under large business groups, Logen does not have its own logistics infrastructure, but charges fees for matching transport companies with individual businessmen involved in parcel delivery services.
Individual customers represent about 90% of Logen’s business, for which per-unit delivery charge is slightly higher than that of corporate customers.
Well to Sea Investment, founded in 2014 by a former M&A official of Kumho Asiana Group, has acquired small to medium-sized Korean companies for 200 billion to 300 billion won. Its investments included Aju Capital Co. Ltd., a non-banking financial company, and Junjin Heavy Industry Co. Ltd., a concrete pump truck manufacturer.
Citigroup Global Markets is handling the sale of Logen.
By Chaeyeon Kim
<Edited by Yeonhee Kim>