Korea’s Tmax Group buys back software developer for $612 mn

South Korea’s Tmax Group bought back the software making unit it had sold to a local private equity firm two years ago to try to boost synergy with its database business.

TmaxData Co., the group’s database management system (DBMS) unit, on Thursday exercised a call option to buy back a 60.9% stake in TmaxSoft Co. from Skylake Equity Partners Ltd. for 820 billion won ($612 million) including the guaranteed 16% internal rate of return for the private equity firm, said investment banking industry sources.

TmaxData regained management control over TmaxSoft after paying some 800 billion won as Seoul-based Skylake has already taken the rest as dividends, the sources said.

Tmax Group sold the stake in TmaxSoft, an enterprise software developer, for 560 billion won to the buyout firm in March of 2022, with a call option to repurchase the shares for two years from March 15, 2024. The group was supposed to guarantee Skylake a minimum 16% internal rate of return when it exercised the option.

Korean PE firms including Cactus Private Equity provided funding for the group’s buyback: Cactus and STIC Investments injected 1.1 trillion won into TmaxData. The group plans to use the remaining 300 billion won for debt repayment and business operations among others.

CASH COW

TmaxSoft, Korea’s top middleware developer, is expected to play the role of cash cow in the group. Middleware refers to a type of computer software that lies between an operating system and the applications running on it.

The company’s operating profit rose 2.8% to 21.8 billion won in the first half from the same period a year earlier as sales grew 8.5% on-year to 64.8 billion won.

TmaxSoft is expected to achieve synergy with TmaxTibero Co., TmaxData’s wholly owned database solutions subsidiary, whose key clients include public institutions.

Tmax Group aims to create a future growth structure centered on TmaxSoft, TmaxTibero and TmaxA&C.

The group’s artificial intelligence and cloud unit is developing a platform dubbed Tmax SuperApp, which allows users to create competitive, high-quality apps without professional coding technology.

The platform, an ambitious project launched by Tmax Group Chair Park Dae-yeon, is set to run in any environment without relying on specific operating systems, devices and app markets.

Write to Jong-Kwan Park at pjk@hankyung.com
 
Jongwoo Cheon edited this article.