This article was published on April 11, 2025, at 4:41 p.m. on the ChosunBiz MoneyMove site.
The private equity fund (PEF) operator J&Private Equity, which is proceeding with the sale of management rights for ship block equipment manufacturer HYUNDAI HYMS, has successfully recovered more than the original investment amount in advance. They secured dividends by raising acquisition financing, returning principal to the limited partners (LPs) and potentially reducing the financial burden for candidates looking to acquire management rights, thereby achieving a 'two birds with one stone' analysis.
According to investment banking (IB) industry sources on the 11th, J&PE, the major shareholder of HYUNDAI HYMS, raised 81.5 billion won in acquisition financing using its 52.75% stake in HYUNDAI HYMS as collateral last month. The special purpose company (SPC) Hercules Holdings Co., Ltd, a subsidiary of J&PE, obtained loans from NH Investment & Securities and Kiwoom Securities and then distributed the funds as dividends to the investors of the 'J&Hercules PEF.' The interest rate is around 6.1% per year.
This is the first time acquisition financing has been mobilized for HYUNDAI HYMS. J&PE acquired a 75% equity stake in HYUNDAI HYMS from HD Hyundai Heavy Industries for 100 billion won in 2019, but there was no loan secured against the equity at that time.
There are several reasons for J&PE's decision to distribute dividends through recapitalization this time. First, since the project fund (J&Hercules PEF) that acquired HYUNDAI HYMS is maturing this month, it was determined that it is better to return the invested principal to LPs through early dividends instead of vaguely waiting for the sale of management rights.
Previously, J&PE received 26.3 billion won in dividends from 2019 to 2022 and recovered 25.4 billion won through the sale of existing shares when HYUNDAI HYMS went public in January last year. Including the 81.6 billion won received this time, it has completed a total recovery of 130 billion won.
The recapitalization this time also helps alleviate the burden on prospective buyers looking to acquire management rights for HYUNDAI HYMS. An IB industry official noted, "For prospective buyers, it would be less burdensome to acquire with acquisition financing rather than 100% equity."
Meanwhile, J&PE plans to select a sale manager as early as the end of this month or the beginning of next month and officially start the management rights sale process. Based on the market capitalization of 624.7 billion won calculated that day, J&PE's equity value is estimated at 330 billion won. Assuming a 100% management premium is applied, it could rise to the 600 billion won range.