Tcha Partners mulls largest-ever sale of Korean bus operators

Seoul-based private equity firm Tcha Partners Asset Management Co., which owns 17 domestic quasi-public bus operators via four funds that closed at 362 billion won ($262.3 million), plans to sell the companies in what is poised to be the largest ever such deal in terms of the number of local buses involved.

The PE manager will confirm the timeline for the sale procedures by the end of June and start a tender offer in the third quarter, according to banking sources on Monday.

Tcha owns the bus companies operating in the capital and other major cities including Incheon, Daejeon and Jeju. Under the quasi-public bus system, local governments back the companies should they make a loss, thus guaranteeing financial stability, in exchange for controlling the companies’ routes.

“Domestic pension and retirement funds will favor the assets as the bus companies have dominant market share and financial stability,” a banking industry official said. “We expect Korean mid-sized and large PE firms, major financial institutions and transportation-related companies to join the bid,” the official added.

Tcha bought 10 companies operating 950 buses through its three public mobility funds in 2019 and 2020 with a combined size of 162 billion won, including 52 billion won in equity. Tcha is considering putting the assets on the market first, the deal is expected to be the largest-ever such sale given the combined number of the operators' buses. 

Three of the vehicles, which own operators including Dong-A Transportation Co., BRTKorea Corp. and Samhwan Bus Co., will mature one by one starting at the end of this year.

Tcha may also put the other seven companies, running 650 buses within its fourth public mobility fund, on the market. The investment firm bought the assets in 2021 with the 200 billion won fund, which includes 80 billion won in equity.

Singapore-based Keppel’s infrastructure division and private equity giant KKR & Co. have shown interest in the deal. But banking industry insiders expect that selling the bus companies, which are partially backed by Korean citizens’ taxes, to foreign investors will be difficult.

Including the Seoul Metropolitan Government, major municipalities in Korea have set up criteria for foreign capital involvement in the domestic quasi-public bus system and strengthened oversight of foreign investors’ ownership via funds since 2022.

Write to Jun-Ho Cha at chacha@hankyung.com

Jihyun Kim edited this article.