이 기사는 2021년 09월 30일 08시07분 thebell에 표출된 기사입니다

A consortium of Seoul-based IGIS Asset Management and US private equity giant KKR will enter the race for Emart’s head office in Seongsu-dong, eastern Seoul, according to industry sources on Tuesday, joining other consortiums interested in the property which is expected to be worth more than 1 trillion won ($843 million).

Other potential bidders include a consortium consisting of Mirae Asset Global Investments and game developer Krafton. Taeyoung Engineering & Construction also teamed up with ISTERN Investment & Development for a joint offer, according to sources. Emart will receive bids on Thursday.

IGIS and KKR previously worked together on a redevelopment project for Seoul’s former Renaissance Hotel site. IGIS bought the project for approximately 2 trillion won from a developer backed by Kwan Yoon, general partner of Bluerun Ventures and the son-in-law of late LG Group chairman Koo Bon-moo, with KKR investing about 300 billion won in the project.

Krafton, known for its online multiplayer game PlayerUnknown's Battlegrounds, is interested in purchasing the property, probably to use it as the company’s office. The game developer recently changed its headquarters from Pangyo, Gyeonggi Province, to Seoul and also bought land in Seongsu-dong.

Taeyoung E&C, one of the major builders in South Korea, last year purchased Emart’s land in Magok, western Seoul. It completed the transaction by using a bridge loan worth 980 billion won.

The sale process for Emart’s headquarters initially attracted interest from multiple developers and construction companies. However, many of them ultimately pulled out.

Among them are Inchang Development, which had reportedly considered forming a consortium with Hyundai E&C, and White Korea Corporation. Mastern Investment Management had reportedly been in discussions to team up with Hyundai Engineering, but Hyundai Engineering decided to withdraw.

The high price tag seems to have discouraged potential buyers from bidding for the property. The seller did not set a floor bid price. But, if the bidding war heats up, the price could be pushed up well above 1 trillion won, which may make the deal unprofitable for some developers, industry watchers said. The successful bidder also needs to make the full payment in a two-month period.

The building, which was built in 2001, has 20 stories above and three under the ground with a site area of 19,359 square meters and total floor area of 99,474 square meters. Its book value is less than 100 billion won.

The land where the building is located is currently classified as a semi-industrial area according to the local law. Even if the use of the land is changed to a residential area – which would allow a developer to build apartments on it – the price tag of more than 1 trillion won would potentially make it difficult to gain profits from the development because of the government’s price ceiling system for new apartments, industry experts said.

“I heard some potential buyers decided to withdraw because they considered the price too high,” an industry insider said. “But Emart has already secured interest sufficient to proceed with the sale process, and now attention is turning to the final sale price.” (Reporting by Min-kyu Sin)