SK Seorin Building (Image courtesy of SK Group)
SEOUL, May 20 (Korea Bizwire) — A growing wave of carve-out mergers and acquisitions (M&A)—in which large corporations sell off non-core business units—is reshaping the South Korean dealmaking landscape, with private equity (PE) firms emerging as key players.
According to a recent report by the Korea Capital Market Institute, domestic conglomerates are accelerating portfolio streamlining in response to economic uncertainty and the need for liquidity. As a result, PE firms are stepping in to acquire undervalued divisions with high upside potential.
The number of carve-out transactions in Korea jumped from 8 in 2022 and 10 in 2023 to 17 in 2024, signaling a marked increase in this form of strategic divestiture.
Notable transactions last year included:
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SK Enpulse’s fine ceramics unit, acquired by Hahn & Company
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SKC’s polyurethane raw material business, SK PU Core, sold to Glenwood PE
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Taeyoung Group’s environmental services firm Ecobit, taken over by an IMM Investment-led consortium
Carve-Out Deals Surge as Korean Conglomerates Streamline Portfolios (Image supported by ChatGPT)
This year, Hahn & Company has already made headlines by acquiring both the CMP pad division of SK Enpulse and SK Specialty, a producer of specialty gases under SK Group.
Additional high-profile carve-outs may be on the horizon, with SK Group’s wafer producer SK Siltron and LG Chem’s aesthetics division rumored as potential sell-offs—again likely attracting PE buyers as primary contenders.
The report notes that Korean PE firms are under pressure to deploy significant dry powder, with fund sizes now scaling to over 1 trillion won ($740 million). Specialized carve-out funds are gaining traction, offering a blueprint for acquiring underappreciated assets and enhancing their value through operational restructuring.
“While carve-out deals are complex—requiring separation from the parent group—they offer substantial return potential when executed well,” the report said, noting that buyer-seller interests are increasingly aligned.
Globally, carve-out M&A activity is also gaining momentum in the U.S., Europe, and Japan, suggesting a broader structural shift across PE markets.
However, the report warned of regulatory uncertainty, especially in light of South Korea’s financial authorities reviewing the entire PE framework following the Homeplus controversy. Any forthcoming changes in oversight could pose new challenges for the carve-out ecosystem.
Still, the institute concluded, “Private equity’s role as a value-enhancing partner during large corporate restructurings is becoming increasingly vital in South Korea’s evolving industrial landscape.”
M. H. Lee (mhlee@koreabizwire.com)
