This article was published on June 30, 2025, at 5:23 p.m. on the ChosunBiz MoneyMove site.
Korea's leading enterprise resource planning (ERP) company DOUZONE has recently been engulfed in rumors of management rights sales. Reports suggest that five private equity firms, including Kohlberg Kravis Roberts (KKR) and EQT, are considering entering the acquisition race.
This deal is not strictly a management rights sale but rather a 'sale of equity of the second largest shareholder.' It involves acquiring a 10% stake held by Shinhancorp's special purpose company (SPC), the second largest shareholder. It is said that prospective buyers will first acquire the second largest shareholder's equity and later structure a deal to acquire the management rights stake of Chairman Kim Yong-woo via a shareholder agreement.
According to the investment banking (IB) industry on the 30th, multiple private equities are currently in contact with Chairman Kim, the largest shareholder of DOUZONE, expressing their intention to purchase the second largest shareholder's equity. Chairman Kim holds a 21.5% stake. Based on DOUZONE's market capitalization (20.5 trillion won), the estimated value of the equity is approximately 440 billion won.
To understand why private equities seeking to acquire the second largest shareholder's equity are in contact with Chairman Kim, it is necessary to look at the relationship between the largest and second largest shareholders. In April of last year, Shinhancorp established an SPC, 'Shinhancorp Value Up No. 1,' to acquire a 9.99% stake in DOUZONE, which had been held by the previous second largest shareholder, Bain Capital.
At that time, Bain Capital decided to exit its investment because Chairman Kim was in a position where implementing the shareholder agreement was difficult.
The shareholder agreement between Chairman Kim and Bain Capital included a call and drag provision (the major shareholder can exercise a call option on the second largest shareholder's equity, but if the call option is waived, the second largest shareholder can bundle the major shareholder's equity and sell it to a third party). Chairman Kim guaranteed Bain Capital an internal rate of return (IRR) of around 6-7%. However, as DOUZONE's market value declined significantly, Bain Capital found itself unable to secure the promised returns, and Shinhancorp ultimately stepped in as a savior.
At that time, Shinhancorp had established an SPC primarily financed through acquisition finance to acquire shares from Bain Capital. The lending group was provided with management rights equity as collateral. In other words, the SPC was an entity created temporarily to acquire Bain Capital's equity. Eventually, it was in a position where the equity had to be sold at some point.
In fact, Chairman Kim was said to have received sale proposals from private equities while considering refinancing to lower the interest rate (in the 7% range) of the SPC's lending group.
An investment banking industry source noted, 'It seems like an over-interpretation to say that the entire management rights equity will be sold immediately,' adding, 'For now, the plan of the private equities is likely to acquire the equity of Shinhancorp's SPC to ease the interest burden and devise a medium-to-long-term value-up strategy with Chairman Kim.'
Prospective buyers eyeing DOUZONE are reportedly envisioning a scenario 'after' acquiring the second largest shareholder's equity. There is a high possibility that contract clauses, such as the call and drag previously made by Chairman Kim with Bain Capital, will reemerge. This is why private equities are making proposals to acquire the second largest shareholder's equity to Chairman Kim.
However, industry insiders explain that the likelihood of these private equities acquiring Chairman Kim's management rights equity in the near term is low.
Recently, DOUZONE announced its plans to integrate its 'AI Transformation' strategy with sustainable management in a long-term roadmap, aiming to implement a digital management environment through an AI-integrated platform. As it is pushing for value enhancement to enter the global market in the long run, it is believed that for at least the next five years, the second largest shareholder will assist Chairman Kim in realizing his plans, and the acquisition of management rights will likely take place afterward.