The PE Headquarters of Macquarie Infrastructure Asset Management, a private equity fund manager, hit the jackpot with its investment in LG CNS, an information technology (IT) service company of LG Group.

It has recently selected Samsung Securities, KB Securities, KB Kookmin Bank, Korea Investment & Securities, and Kiwoom Securities as lead managers for a 1.2 trillion won recapitalization of LG CNS. 

Macquarie acquired a 35 percent stake in LG CNS from LG Corp. for 950 billion won in May 2020. It mobilized 450 billion won, which consisted of 350 billion raised through a project fund and 100 billion won in the existing fund. It secured the remaining 500 billion won through acquisition finance. In addition, it took out a loan of about 100 billion won to cover the acquisition cost and interest payments.

Macquarie will recover its investment by increasing the size of the acquisition finance by 700 billion won through this recapitalization, thanks to a large increase in the value of LG CNS in two years. LG CNS’ sales rose from 3.28 trillion won at the end of 2019 to 4.14 trillion won in 2021. In particular, its operating profit surged from 212.8 billion won to 328.5 billion won during the same period, driving the growth of its corporate value.

Over the past two years, LG CNS has paid a total of 169.5 billion won in dividends and Macquarie received about 60 billion won in dividend income. When the recapitalization is completed, Macquarie plans to withdraw all of its 450 billion won investment in LG CNS and return it to major investors in the form of special dividends.

Macquarie is also the second-largest shareholder with a 35 percent stake, and is expecting additional investment returns when LG CNS is listed in the stock market in the future.