This article was published at 3:23 p.m. Oct. 27, 2025 on the ChosunBiz MoneyMove site.
The sale of defense parts maker MNC Solution, led by private equity firm Socius PE and Well to Sea Investment, has slowed. Even prominent potential buyers are taking a cautious stance because valuations surged amid the K-defense boom.
On the 27th, sources in the investment banking industry said Socius PE and Well to Sea Investment have not finalized follow-up schedules for the sale of MNC Solution's management rights after the preliminary bid. The two firms in September confirmed a list of potential bidders with sell-side adviser UBS Securities and distributed an information memorandum (IM).
The assets for sale are 73.8% of the management rights equity in MNC Solution owned by Socius PE and Well to Sea Investment. The two firms previously acquired Motrol, which was under creditor management during Doosan Group's restructuring in 2020, and later spun off the defense unit to establish MNC Solution.
An IB industry official said, "Typically, after IM distribution, bidders conduct basic due diligence within about two weeks and then a preliminary bidding round is held to receive indicative prices," adding, "At this point, the process should have selected two to three candidates to advance to the final bid by evaluating preliminary bid prices, strategy and acquisition intent."
Analysts said concerns about a weak preliminary bidding turnout have led to the slower sale pace. Not only large defense-related conglomerates such as Hanwha Group and LIG Group, which were considered strong potential buyers, but also midtier defense parts makers and domestic private equity firms have shown less interest in participating in the MNC Solution acquisition than expected.
High valuations are a stumbling block. Riding the tailwind of rising K-defense exports, MNC Solution's market capitalization climbed from about 500 billion won to more than 1.7 trillion won. Earlier this month it even exceeded 2 trillion won. The equity held by Socius PE and Well to Sea Investment is estimated at about 1.25 trillion won.
A securities industry official said, "As a supplier of drive and control systems used in K-defense weapons systems, the company is an attractive acquisition target, but there are few domestic investors able to enter trillion-won deals," and added, "The fact that foreign capital participation is restricted for defense firms is also an obstacle."
MNC Solution's performance has steadily grown. Revenue rose from 125.9 billion won in 2021 to 282.7 billion won this year, and last year's net income was 26.9 billion won. However, some say it is burdensome to apply a company value of more than 1 trillion won to a company with net income in the 20-billion-won range.
Regulatory uncertainty across the domestic mergers and acquisitions (M&A) market is also cited as a reason for the slower pace. If the timing of implementing measures such as the proposed mandatory tender offer overlaps with deal timing, additional acquisition costs could arise, so potential buyers are said to be timing their purchases and remaining cautious.
Some in the industry expect the transaction to close after the first half of next year. Unlike ordinary manufacturers, sales of defense companies require additional time for approvals such as business transfer authorization and defense technology protection reviews to prevent national security and technology leakage.
An IB industry official said, "Socius PE and Well to Sea Investment had pushed to speed up the sale within the year, but recently they have shifted toward increasing overall market understanding of the defense industry," adding, "The fund used to invest in MNC Solution does not mature until the end of next year, so there is time."