IMM has taken an aggressive approach to spur AirFirst’s value: The PE house bought a gas production plant site to win new orders and restructured AirFirst, which had been controlled by Germany’s gas giant Linde plc.
IMM’s efforts have led to AirFirst's business wins. In 2020, AirFirst was tapped as an industrial gas supplier to Samsung Electronics Co.'s third domestic plant (P3) for chip fabrication.
AirFirst’s revenue more than doubled from 2019 to 603.1 billion won in 2022, with earnings before interest, taxes, depreciation and amortization (EBITDA) rising 36.1% to 142 billion won over the same period.
IMM Chief Executive Song In-joon (I.J. Song) (Courtesy of IMM)
ESSENTIAL FOR KEY EXPORTS
IMM acquired a 100% stake in AirFirst, formerly Linde Korea, for 1.4 trillion won from global chemicals giant Linde in March 2019.
The deal came as Korea’s antitrust regulator in 2018 ordered Linde and former US industrial gas company Praxair AG to sell their assets if the two firms wanted to proceed with their $80 billion merger.
With a strong resolve to buy Airfirst, IMM was selected as the buyer of AirFirst in early 2019, among big competitors like Macquarie Group.
IMM saw the industrial gas sector as attractive. “Industrial gas can be defined as a combination of technology and infrastructure. That means the sector has both stability and growth potential,” said IMM Chief Executive Song In-joon (I.J. Song).
“Industrial gas is essential to the manufacture of Korea’s key exports — semiconductors, displays, chemicals and steel. This means that as long as Korea’s gross domestic product increases, the industrial gas market will continue to expand,” said IMM Deputy Chief Investment Officer Yoo Hun-suk.
AirFirst transports industrial gas (captured from AirFirst's website)
BOLD DECISION
Yang Han-yong, the former CEO of Linde Korea, overhauled AirFirst as soon as IMM bought the gas supplier. Under his leadership, AirFirst strengthened key roles in the Korean business operation, recruited professionals for gas plant design and restructured the sales team.
“We believe that speedy reorganization is critical in a carve-out deal. There were new synergy effects as many teams in AirFirst increased their collaboration,” said Yoo.
AirFirst boosted its value further by winning Samsung orders. To distinguish itself from other gas producers, IMM made the bold decision to buy a gas plant site near Samsung’s semiconductor plant campus in Pyeongtaek, Gyeonggi Province. In 2020, Samsung selected AirFirst to supply it with industrial gas.
As earnings increased, IMM’s value soared to 3.7 trillion won in June of this year from 1.3 trillion won in early 2019.
GROWTH POTENTIAL, STABILITY
Market insiders say AirFirst has been a springboard for IMM to become a major buyout manager in Korea. The deal with BlackRock has proved IMM’s value-creating capability, they say.
IMM still holds a 70% stake in AirFirst while BlackRock owns the remaining 30%.
“AirFirst is still very attractive, and that’s why we still have a majority stake,” said Yoo. “IMM will control the management and further ramp up its corporate value as AirFirst is strong in terms of growth potential, profitability and stability,” he added.
Write to Jong-Kwan Park at pjk@hankyung.com Jihyun Kim edited this article.
