PE firms seek to buy Korean explosives maker for $218 mn

A private equity consortium seeks to buy a 100% stake in Koryo Nobel Explosives Co., South Korea’s No. 2 industrial explosives manufacturer, for about 300 billion won ($217.7 million).

Seoul-based Eum Private Equity has tapped a domestic consortium led by a unit of Korea Investment Private Equity and Kiwoom Private Equity as the preferred bidder for Koryo Nobel and signed a non-binding agreement for sale, banking industry sources said on Tuesday. Local merger and acquisition advisor KR& Partners is the deal's lead manager.

Eum has accelerated the sale process since April with a goal to finalize the deal by October. Some five companies and PE funds, including lead and zinc smelter Korea Zinc Inc., chemicals maker TKG Huchems Co. and asset manager Welltosea Investment Co., joined the bid last month.

“The sale of Koryo Nobel has attracted potential bidders as the company has posted robust earnings from the industrial explosives sector, which has high entry barriers,” an investment banking source said.

“Demand for industrial explosives in Korea is forecast to increase on upcoming infrastructure projects such as construction of Gadeokdo New Airport,” the source added. The international airport is scheduled to open in Busan in 2029. 

Eum acquired a 100% stake in Koryo Nobel for 133 billion won in 2019.

Founded in 1993, Koryo Nobel is Korea’s second-largest industrial explosives maker after Hanwha. Based in Busan, Koryo Nobel operates factories in Goseong, South Gyeongsang Province, and Taebaek, Gangwon Province.  

The company logged 16.6 billion won in operating profit and 69.6 billion won in revenue last year, up 89% and 13.3% on-year, respectively. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) nearly doubled to 21 billion won last year from about 10 billion won in 2019.

Write to Ji-Eun Ha at hazzys@hankyung.com
Jihyun Kim edited this article.