이 기사는 2019년 11월 27일 08:00 thebell 에 표출된 기사입니다.

Glenwood Private Equity (Glenwood PE), South Korea's homegrown buyout firm, is distinguishing itself from other private equity firms, successfully making three investments through its first blind-pool fund.

The six-year old private equity firm raised a 450 billion won ($383 million) blind-pool fund in July of 2018 for the first time in the firm's history. The buyout firm's strong track record made this possible in the relatively short period since its establishment. In 2016, it exited its two-year investment in home appliance company Tong Yang Magic (currently SK Magic), which generated an internal rate of return (IRR) of nearly 37 percent. The same year, partnering with Hong Kong-based Baring Private Equity Asia, the buyout firm bought Lafarge Halla Cement, and successfully exited a year later with an IRR of 14 percent.

With a proven track record, the private equity firm received great attention from domestic institutional investors, including the National Pension Service and the Korean Teachers' Credit Union, which led to a successful launch of its first blind-pool fund last year. In 16 months since its inception, the fund has made three investments.

Based on these investments, Glenwood PE's investment style can be best characterized in three words: carve-out strategy, high entry barriers and market dominance. Acquiring a controlling stake in non-core business units of conglomerates is the main play of the buyout firm. It has also targeted businesses in an industry with high entry barriers and those with a strong position in relevant markets.

Glenwood PE made the first investment via its blind-pool fund late last year, when it acquired GS Energy Corp's city gas subsidiaries - Seorabeol City Gas and Haeyang City Gas - for about 610 billion won ($519 million). The private equity firm funded part of the acquisition - around 130 billion won ($110 million) - through the blind-pool fund.

Glenwood PE focused on the fact that both companies provide gas distribution services exclusively in their local communities, enabling them to enjoy stable profits. The firm also thought that an expected increase in gas consumption due to a newly established industrial complex in the area and the growing number of one person household would provide additional growth potential.

The remaining two buyout investments have been made in the second half of this year. In September, Glenwood PE entered a stock purchase agreement with French material producer Saint-Gobain to acquire its 100 percent stake in Hankuk Glass Industries (more commonly known for its brand HanGlas) in a deal valued at 330 billion won ($280 million).

Together with KCC, Hankuk Glass Industries rules the domestic glass market characterized as an oligopoly. The private equity firm expected insulated glass market to grow at a rapid pace, with regulations on energy efficiency increased globally. In particular, a glass industry has high entry barriers due to high initial investment cost and technology challenges.

Glenwood PE is also set to be the new owner of SKC Kolon PI, the world's number one polyimide (PI) film maker based in Korea. The company, which produces colored PI film, is a joint venture formed by SKC and Kolon Industries. The two companies decided to sell their stake in the joint venture to expand their transparent PI film business.

The buyout firm was positive on the growth outlook for SKC Kolon PI due to its strong position in the global market and the expected benefit from increasing adoption of electric vehicles. It was selected as the preferred bidder by the seller last week, beating other major peers. The transaction value is expected to be 630 billion won ($535 million), the biggest investment that Glenwood PE has made via its blind-pool fund so far.

With these three investments, the buyout firm is expected to use up 70~80 percent of its blind-pool fund. "Despite the relatively short period of the firm's history, Glenwood PE has strengthened its presence in the domestic private equity market, with a series of acquisitions of companies in the manufacturing sector which are not easy to run. Much attention is on the firm's future path," an industry insider said.

(By reporter Kim Hye-ran)