이 기사는 2020년 03월 20일 08:00 thebell 에 표출된 기사입니다.

Speculation is mounting on reasons why SK Hynix has chosen to keep in the background – rather than pursuing an outright buyout – during the process of buying MagnaChip’s foundry business.

South Korea’s SK Hynix plans to invest about 200 billion won as a single limited partner in a PE fund dedicated to buying MagnaChip’s foundry business for roughly 400 billion won, sources close to the matter said Monday. The fund will be managed by Alchemist Capital Partners.

Another fund with the Korean Federation of Community Credit Cooperatives (KFCC) as its single limited partner will cover the remaining amount of the acquisition price, and will be managed by Credian Partners. Credian will invest with Alchemist in a special purpose entity incorporated solely to acquire the chipmaker’s assets.

Under a deal structure, the KFCC will take over a 50 percent plus one share stake in the special purpose entity, with its money going toward the senior tranche. Meanwhile, the remaining minority stake will be acquired by SK Hynix which will be in the junior tranche.

Although SK Hynix is viewed as a de facto strategic investor leading the deal, it has chosen to invest in Alchemist’s fund to buy MagnaChip’s foundry business, rather than making an outright acquisition. One reason behind such a strategic move seems to avoid risks in an uncertain business environment, industry watchers said.

The semiconductor supercycle that lasted for years ended, and recession concerns are growing globally due to coronavirus headwinds. A buyout of the business would make SK Hynix less agile in the highly uncertain economic environment, industry watchers pointed out. Indeed, it was also Alchemist that submitted a bid for the MagnaChip’s foundry business on behalf of SK Hynix in the first round of bidding last spring.

Partnering with financial investors is also seen as an extension of previous cases of “market-friendly” deals done by SK Group’s affiliates. For example, SK Telecom created a consortium with Macquarie, Keistone Partners and Daishin Private Equity when it acquired ADT Caps for about 2.9 trillion won in 2018, in a deal where the telco company only took a 55 percent stake. In the same year, SK Planet partnered with H&Q which bet 500 billion won on the company’s spun-off online shopping platform Eleven Street.

SK Hynix seemed to choose to follow the same strategy. SK Hynix had about four trillion won in cash and cash equivalent as of the end of 2019 on a consolidated basis, which is more than enough to take on the acquisition alone. But it could reduce its financial burden by partnering with financial investors.

The U.S. government’s concerns about technology transfer to China also played a role in SK Hynix’s decision to invest through a fund, as MagnaChip is a U.S. company listed on the New York Stock Exchange. Indeed, the Trump administration blocked a Chinese PE firm from buying U.S.-based chipmaker Lattice Semiconductor in 2017.

SK Hynix established a joint venture in 2018 with China’s Wuxi Industry Development Group. The company reportedly considered the possibility that the U.S. government may bar the acquisition for the same reason. SK Hynix System IC, a 100 percent subsidiary of SK Hynix, owns a 50.1 percent stake in the joint venture in China, with the remaining stake owned by Wuxi.

As such, SK Hynix could have decided to take over a 50 percent minus one share stake in MagnaChip’s foundry business in order to make clear its intention to remain as a minority shareholder. “SK Hynix thought that its joint venture with Wuxi could be a problem in the regulatory approval process,” an industry insider said. “From what I understand, SK Hynix set up such ownership structure to emphasize that it does not intend to sell the U.S. assets to China.”

(By reporter Jo Se-hun)