This article was published on Feb. 19, 2025, at 4:10 p.m. on the ChosunBiz MoneyMove site.
Crescendo Equity Partners, a domestic private equity fund (PEF) management firm, is raising expectations for an exit from semiconductor process company HPSP. The competition for HPSP acquisition began when Crescendo put its controlling equity stake of HPSP on the market, attracting significant participation from major domestic and international PEF managers, resulting in great success in the event. There are even predictions that revenues could amount to more than 160 times the initial investment.
According to the investment banking (IB) industry on the 19th, all the major global PEF management firms, branded as the so-called 'big three buyout funds'—Kohlberg Kravis Roberts (KKR), Carlyle, and Blackstone—have registered their names in the recent preliminary bidding for the sale of HPSP's controlling equity stake. In addition, U.S. PEF manager Bain Capital and Korea's largest PEF manager MBK Partners also participated.
The object for sale is the 40.9% controlling equity stake of HPSP held by Crescendo. Earlier, in the second half of last year, Crescendo selected Swiss investment bank UBS as its advisor and began the equity sale procedure in earnest. Crescendo and UBS plan to conduct a main bidding process to select a preferred negotiation partner as soon as the five PEF managers participating in the preliminary bidding complete their due diligence before the main bidding takes place, aiming to complete the sale by the end of the year.
Expectations for Crescendo's exit from HPSP are also increasing. Given that the sale price for the equity stake, considering HPSP's market capitalization as a listed company on the KOSDAQ, has already surpassed 1 trillion won, they are gaining an advantage in price negotiations. Observations suggest that the controlling equity premium, which typically ranges from 30% to 40%, will significantly exceed 50%.
Crescendo is already anticipating revenue of 100 times the initial investment, even without a controlling equity premium. HPSP, established in 2017 after acquiring Poongsan's semiconductor equipment division, has rapidly grown to a company with a market capitalization of approximately 2.7 trillion won, riding the wave of miniaturization in semiconductor circuit patterns. Eight years ago, Crescendo acquired a 51% equity stake in HPSP for 10.6 billion won, valuing the company at 20.7 billion won.
HPSP is recognized as the world's number one business in high-pressure hydrogen annealing (HPA) and high-pressure oxidation processes (HPO) equipment designed to prevent semiconductor circuit defects. It has secured client relationships with not only Samsung Electronics and SK hynix but also memory and foundry companies globally. Following its acquisition in 2018, revenues grew dramatically from 2.4 billion won to 159.3 billion won after listing on the KOSDAQ in 2022, with an estimated 181 billion won in the last year.
Some in the industry believe Crescendo could reap profits exceeding 160 times its initial investment through the exit from HPSP. Adding a 50% controlling equity premium to the market price could raise the sale price to around 1.6 trillion won. Additionally, Crescendo is expected to receive dividends amounting to 19.7 billion won in April. In 2019 and 2020, they also collected approximately 15.6 billion won in dividends.
An IB industry insider noted, “If Crescendo's sale of its controlling equity stake in HPSP is completed at the market price level, it would yield a revenue of 100 times the initial investment, marking the largest return in the 20-year history of domestic PEFs upon deal closure,” adding, “In buyout investments, generating just 3 to 5 times the initial investment is typically considered a major success.”
Meanwhile, Crescendo PE is a PEF management firm co-founded in 2012 by Peter Thiel, the co-founder of PayPal, and CEO Lee Gi-doo, who graduated from the Massachusetts Institute of Technology (MIT), to invest in Korea. It primarily invests in the technology sector, and as of December last year, its assets under management (AUM) totaled 1.5788 trillion won. In addition to Lee, Vice Presidents Park Sung-min from Excelsior Capital and Park Jin-soo from the Industrial Bank of Korea are also involved.