MiCo, a semiconductor materials and components company listed on KOSDAQ, will securitize part of the equity in Hyundai Heavy Industries Power Systems (HPS), which it acquired last year, to raise 31 billion won. The company plans to use part of the funds raised to acquire Plantec, a steel and plant engineering company.
This fundraising confirms MiCo's mergers and acquisitions (M&A) performance. That is because the equity value of HPS, acquired just a year ago, has been assessed at twice as much, and the company has secured room for additional M&A by securitizing it.
On the 28th, MiCo will sign a PRS (price return swap) contract to transfer about 150,000 shares of HPS stock (15.0% equity) to Mirae Asset Securities. PRS is a derivative booking in which corporations deposit shares with a financial company such as a securities firm, pay interest under conditions of sharing gains and losses from stock price fluctuations.
If Mirae Asset sells the 150,000 or so HPS shares that are the underlying assets, it can settle the difference based on 31 billion won, and MiCo will pay interest of 5.65% annually on a quarterly basis until maturity.
What particularly drew investors' attention in this fundraising was the equity value of HPS. Considering the amount raised and the shares disposed of, the company was assessed at 206,000 won per share for HPS. That is twice the price when MiCo acquired HPS equity just a year ago.
MiCo first acquired equity in HPS in July last year. Saying it would strengthen its business portfolio in the energy sector and secure future growth engines, the company acquired about 490,000 HPS shares (49.46%) for about 52 billion won. Then in July this year, it further increased its equity. It invested 21 billion won to acquire an additional 200,000 HPS shares, raising MiCo's HPS equity to 69.46%.
The price at which MiCo acquired HPS equity over two rounds in July last year and July this year was 105,031 won per share. Yet in just one year, it raised funds with HPS valued at over 200,000 won per share. A simple calculation suggests the 73 billion won injected to acquire HPS a year ago is now valued at 140 billion won.
An industry official said, "Since the Donald Trump administration launched this year, domestic power generation companies have had more work, and as the global artificial intelligence (AI) boom has driven up electricity demand, orders are expanding," and added, "Thanks to that, HPS's valuation has risen sharply in a short period."
HPS is a specialist manufacturer of power and industrial boilers and scrubbers. It originally belonged to Hyundai Heavy Industries Group, but MiCo acquired it last year during the group's restructuring. The Korea IR Service said, "The industrial boiler and power generation equipment market is being reshaped around high-efficiency, low-carbon combustion technology," and noted, "Demand for waste heat and waste-to-energy recovery systems is surging."
HPS's new order contract amount jumped from 121.2 billion won in 2023 to 260.1 billion won in 2024. The company expects HPS's new orders to increase further this year to 369.6 billion won.
The company said the PRS agreement was a decision to improve capital efficiency and secure new investment resources. MiCo plans to use part of the funds raised to acquire Plantec. Earlier, MiCo signed a contract to acquire 71.93% equity in Plantec held by United Asset Management Corporation (UAMCO) for 154.2 billion won.