Singapore's sovereign wealth fund GIC, Sweden-based EQT Partners and South Korea-based MBK Partners are among the four shortlisted bidders for shares in South Korea's ADT Caps Co. worth up to 400 billion won ($340 million), according to investment banking sources on Oct. 18.
Seoul-based Meritz Securities Co. also made it to the final round for the pre-IPO placement by the country's No. 2 security services provider, which plans to go public next year.
The pre-IPO shares had drawn six to seven bidders. SK Telecom Co., the top shareholder with a 62.6% stake in ADT, last week narrowed down the list of the candidates.
The shares on offer include part of a 37.4% stake held by a consortium led by Macquarie Korea Infrastructure Fund and new shares, equivalent to about 10% of the company's enlarged share capital.
The non-controlling stake attracted global investment firms, despite doubts about the growth potential of the security services, compared with emerging industries like rechargeable batteries.
In particular, EQT Partners joined the race soon after it raised an $800 million Asia-focused fund. If successful, it would mark a rare investment by the Swedish private equity firm in South Korea. EQT is the largest PE firm in Europe, owned by Europe's powerful business family Wallenberg.
GIC in 2018 made a bid for ADT in a consortium with CVC Capital. MBK had also considered acquiring the securities service provider at the time.
To acquire ADT from The Carlyle Group, SK Telecom had teamed up with the Macquarie-led consortum and paid 2.97 trillion won for its whole ownership. The consortium consists of Macquarie, Keistone Partners and Daishin Private Equity.
Last year, ADT absorbed SK Inforsec Co., then the group's information security service company, to expand beyond on-call physical security into the cloud infrastructure and digital realms.
DEMANDING VALUATIONSK Telecom values the securities services arm at over 4 trillion won, above its bigger rival S-1 Corp.'s market capitalization of 3.2 trillion won as of Thursday's close. S-1, a unit of Samsung Group, commands 55% of the country's physical security market, trailed by ADT with about 30%.
"ADT Caps is bulking up its size ahead of its IPO next year. But based on its results to date, its valuation proposed by SK Telecom seems far-fetched," said one of the sources.
"In addition, the pre-IPO investment is not designed to provide downside protection in case it fails to achieve a target return, which may reduce its attractiveness as an investment target."
ADT Caps' first-half operating profit inched up 2.7% to 56.4 billion won from a year earlier, with revenue up 17.2% year-on-year to 720.3 billion won over the same period.
Credit Suisse and Morgan Stanley are handling the stake sale.
Write to Chae-yeon Kim at
why29@hankyung.comYeonhee Kim edited this article.
