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S.Korea goes out to localize parts, materials, and equipment through M&A

KOTRA and KOFIA hold joint seminar on Sep 25....As a response to Japan's exports curbs

KOTRA and Korea Financial Investment Association (KOFIA) jointly hold "Overseas Parts, Materials & Equipment M&A Seminar " at KOFIA Center, Yeouido, Seoul on September 25.

The seminar was designed to respond to Japan's export curbs and planned to introduce 34 SMEs of advanced countries in parts, materials, and equipment industries listed on the portfolio of foreign private equity.

As the purpose of private equity (PE) is to realize profits through re-sell, it is deemed as potential items for sale despite complicated price negotiation process. However, it is difficult to secure technology only by purchasing little stake. Also, it might be technically infeasible for domestic SMEs to buy big corporations. In this regard, KOTRA selected SMEs of less than KRW 100 billion among those whose management is held by PE funds.

At the seminar, 24 companies under court receivership in advanced countries including Germany will also be introduced. They are also considered as potential semi-sales items as the priority is debt collection through sales. 24 companies under court receivership include 17 companies in the parts, materials, and equipment industries. 20 items for M&A sales and stakes sales from ASEAN countries, where Korean companies have shown high demand, will also be introduced.

KOTRA has supported domestic companies wishing for overseas M&A since 2018, and 53 cases have been signed. Based on its experience and know-how, KOTRA plans to step up support for tech acquisition M&A for small and mid-sized enterprises.

Shawn Chang, Head of Invest KOREA said, "Capability improvement through localization will be key in responding to Japan's exports restrictions in the long-term," adding that "It is necessary to shorten the process through M&A as localizing every setp takes too long time."

Source : Invest KOREA (September 19, 2019)

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