This article was published on Aug. 18, 2025, at 4:23 p.m. on the ChosunBiz MoneyMove site.
The domestic private equity fund (PEF) management company Socius Private Equity (PE) and Well to Sea Investment consortium have initiated the sale process for the management rights of defense industry parts manufacturer MNC Solution. However, it is expected that they will face challenges in finding buyers due to an agreement made with the Korea Exchange during the initial public offering (IPO) at the end of last year that prohibits the partitioning of shares held by the largest shareholder.
On the 18th, according to the investment banking (IB) industry, the Socius PE and Well to Sea Investment consortium, the largest shareholder of MNC Solution, completed the selection of advisory firms for the sale of management rights and began contacting potential buyers. UBS is providing financial advice, Kim & Chang is offering legal advice, and Samil is handling accounting advice. The subject of the sale is the 6,753,900 shares (73.78%) held by the Socius PE and Well to Sea Investment consortium.
MNC Solution's stock price has surged this year. From a closing price of 51,800 won on the day of its listing on the securities market at the end of last year, it has risen to 160,800 won, a gain of about 210%. Consequently, the market capitalization also soared from about 474.1 billion won to 1.4719 trillion won. The value of the equity held by the Socius PE and Well to Sea Investment consortium alone is nearing 1.1 trillion won, leading to expectations that, with a management premium added, the sale price will exceed the mid-1 trillion won range.
MNC Solution's predecessor was Motrol, which was previously an affiliate of the Doosan Group. In 2020, Doosan sold Doosan Motrol to the Socius PE and Well to Sea Investment consortium. Subsequently, Motrol was partitioned in 2023 into two divisions: the civil sector producing hydraulic equipment for excavators and the defense sector (MNC Solution) producing self-propelled gun turret drive devices. The surviving company Motrol in the civil sector was repurchased by Doosan last year.
Due to the nature of operating in the defense industry, MNC Solution's pool of potential buyers is very limited. The Defense Acquisition Act requires prior approval from the Minister of Trade, Industry and Energy if substantial changes in management control are expected in defense firms. Furthermore, foreign participation in management through the acquisition of stocks is subject to separate approval under the Foreign Investment Promotion Act, effectively excluding foreign investment firms from the bidding process. Thus, the pool of buyers can only be narrowed down to strategic investors (SIs) and financial investors (FIs) in Korea.
Another issue is the agreement that the Socius PE and Well to Sea Investment consortium made with the Korea Exchange when they went public last year. According to the 'Management Stability Commitment' submitted to the Korea Exchange by the largest shareholder, they agreed to prohibit any separate partitioning sales of their shares for three years after the listing. As MNC Solution's size has grown, they need to liquidate some equity beyond what is necessary to secure management rights, but the option for block deals has been effectively shut.
However, partitioning sales will be possible after the transfer of management rights. According to the wording in the Management Stability Commitment, it states that partitioning sales are prohibited 'until three years before the transfer of management rights.' This means that only the equity sufficient to secure a change in management can be sold first, and then the remaining equity can be sold separately.
An industry insider noted, "As MNC Solution has grown in size, it seems that prospective acquirers will first sell about 40-50% of the equity needed to secure management rights and then sell the remaining equity in the form of a block deal."
He also said, "It is appropriate that the largest shareholder can only be a domestic corporation or domestic investment firm, but it is permitted for a foreign investment firm to become the second-largest shareholder by forming a consortium." He referred to the case of Morgan Stanley becoming the second-largest shareholder in Hyundai Rotem, explaining that foreign private equity firms can participate in the acquisition process as part of a consortium.
Meanwhile, the sellers are expected to start pre-marketing, such as distributing teaser letters, within the third quarter. They plan to initiate the bidding process in earnest from the end of the year when the major shareholder's lock-up period (one year from the listing date) ends.