MBK Partners acquires FCCL maker NexFlex

The Korea Times

The Korea Times

Finance

Tue, September 26, 2023 | 08:24

Markets

MBK Partners acquires FCCL maker NexFlex

Posted : 2023-03-20 16:02

Updated : 2023-03-21 09:26

Flexible Copper Clad Laminate (FCCL) produced by NexFlex / Courtesy of NEXFLEX

By Anna J. Park

MBK Partners is adding Korea's top flexible copper clad laminate (FCCL) maker NexFlex to its investment portfolio, as Asia's largest private equity firm signed a stock purchase agreement (SPA) with SkyLake Equity Partners, the owner of the FCCL manufacturer, late last week.

According to investment banking industry sources, MBK has agreed to pay 530 billion won ($403 million) to acquire a 100 percent stake in the manufacturer. The payment is expected to be completed by June.

With the signing of the SPA, NexFlex has finally found a new owner, after two previous failed sale attempts last year. Last May, JC Growth Investment, a subsidiary of JC Partners, was first tapped as a preferred bidder to acquire the FCCL manufacturer for about 600 billion won. But, the deal was called off.

Last September, a consortium of Well to Sea Investment and Woori Private Equity was newly selected as the preferred bidder for the acquisition. The consortium suggested 630 billion won for the price, but also failed to follow through on the deal, due mainly to increased financing costs amid interest rate hikes in the second half of last year.

Given that the MBK Partners agreed to purchase the entire stake of the industrial manufacturer for 530 billion won, the price for the country's top FCCL manufacturer was discounted by 100 billion won from the previous failed sale attempt in September.

However, SkyLake Equity Partners is still expected to reap an enormous profit of about five times its original principal in the investment after just five years. In 2018, the private equity firm acquired SK Innovation's FCCL business unit at a price of about 100 billion won.

FCCL is a key component for manufacturing flexible printed circuit boards (FPCBs), an essential part of mobile devices, including cell phones. NexFlex is the country's No. 1 FCCL manufacturer in terms of annual revenue. The firm's annual revenue nearly quadrupled over three years from 2019 to 2022. In 2019, NexFlex posted a revenue of 68.1 billion won, and it soared to 154.7 billion won in 2021. The firm's operating profit has also increased exponentially by over 40 times, from 2019's 1 billion won to 45.8 billion won in 2021. Last year's earnings are also estimated to have nearly doubled from that of 2021.

The deal is MBK Partners' third major acquisition since late last year, following its purchases of 3D dental scanner Medit for 2.4 trillion won and dental implant manufacturer Osstem Implant early this year.

annajpark@koreatimes.co.kr