Korean Companies' Investments Increasing Fast
Hanwha Solutions announced in August that it would acquire renewable energy developer RES France for approximately one trillion won. “The French company was expected to be acquired by a European company, but Hanwha Solutions surprised the entire industry,” said an industry source, adding, “The South Korean company that has been in the solar power industry for just 10 years or so is expected to become a major global player.”
These days, global investment banks are proposing an increasing number of M&A and IPO consulting to South Korean companies. According to industry sources, the number per month amounts to 40 to 50 in the case of major enterprises focusing on business expansion such as SK and Hanwha groups.
This was unimaginable in the past, when foreign companies were unlikely to be acquired by South Korean companies and the latter made few attempts to do so. For a while after the 1997 Asian financial crisis in particular, a number of South Korean enterprises were sold to foreign enterprises and private equity firms.
These days, however, South Korean enterprises are increasing their overseas investments and global investment banks are changing their views. This has to do with, for example, the fact that the former’s investments are increasing fast in sectors such as biotechnology, hydrogen and renewable energy, in which European and U.S. companies excel.
One example is SK Inc., which took over French contract manufacturer Yposkesi in March this year. In addition, in the field of EV powertrain, LG Electronics set up a joint venture with Magna International in July this year at the request of the world's third-largest auto parts manufacturer. Likewise, Hyundai Motor Group acquired Boston Dynamics at the request of the American engineering and robotics design company.
More recently, DL Chemical announced that it would acquire Kraton for about two trillion won. This was surprising news as well in that DL Chemical is a non-major company in South Korea and Kraton is a leading U.S. petrochemical company. South Korean companies in the entertainment sector are no exception, either. HYBE beat Blackstone and acquired Ithaca Holdings for US$950 million in April this year.
For the first three quarters of this year, South Korean enterprises took over 12 foreign companies for more than 100 billion won each. The 12 consist of eight U.S., two European and two Asian companies. In other words, South Korean enterprises are emerging fast in the U.S. and European M&A markets, where the business activity has the longest history. The focus of their M&A investment is shifting from China and Southeast Asia to Europe and the United States as they are increasingly concentrating on advanced economies and future technologies.