[Exclusive] Yeosu Industrial Complex specialty packaging maker Seungsan Pack seeks investment [fn Market Watch]

[Financial News] Seungsan Pack, a maker of specialty packaging materials for heavy cargo in the Yulchon Industrial Complex in Yeosu, South Jeolla Province, is seeking investment. The company has appointed Samil PricewaterhouseCoopers as its investment adviser and has already received letters of intent (LOIs) to invest from multiple investors. The move is seen as a strategy to bring in an investor with the financial resources to expand its global business, centered on the United States and Mexico.
According to investment banking (IB) industry sources on the 20th, Seungsan Pack has appointed Samil PricewaterhouseCoopers as its investment adviser and is considering raising capital in exchange for a partial equity stake. It is reportedly expected to select a preferred bidder soon.
“Export packaging companies with overseas production bases are rare in Korea,” an IB industry source said. “With demand for local production growing amid the reorganization of North American supply chains, this appears largely to be a search for a partner to provide growth capital.”
Seungsan Pack began in 1988 as Useok Packaging, a privately run business making cardboard boxes. It now operates smart factories covering about 12,000 pyeong in Korea and about 40,000 pyeong overseas.
The company’s main products are metal pallets (steel pallets) and metal cases. They are used to package heavy cargo, such as machinery and metal parts, for export. The products are made by welding square steel tubes together. The company says its in-house-developed automated welding machine enables it to supply sturdier pallets at lower prices than competing products. Unlike wooden pallets, steel pallets do not require pest-control fumigation and can be collected and reused, making them an eco-friendly packaging material. Seungsan Pack also produces corrugated board and boxes. Products from its Yeosu plant are supplied to chemical companies and others in the Yeosu National Industrial Complex.
The outlook for the Yeosu Industrial Complex is a key variable. Following the government’s approval of a restructuring plan for the petrochemical industry, ethylene production capacity at the complex is set to fall by 1.39 million tonnes, from 3.52 million tonnes to 2.13 million tonnes. As restructuring proceeds, including the integration of facilities at Yeochun NCC and Lotte Chemical Corporation, local partner companies are also coming under greater pressure over volumes. Industry sources believe Seungsan Pack is seeking to reduce its reliance on domestic demand by increasing the share of its overseas business.
The packaging industry has also drawn steady interest from private equity fund (PEF) managers. A prominent example is IMM Private Equity’s 2015 acquisition of seven companies affiliated with Taelim Packaging, followed by further M&A that expanded its scale. Packaging-sector deals have continued overseas this year as well, including MBK Partners’ acquisition of a Japanese aluminum packaging company.
“Steel pallets can be reused, giving them advantages in terms of environmental, social and governance (ESG) factors,” another IB industry source said. “Both financial investors pursuing a bolt-on strategy (additional acquisitions of companies in the same industry) and strategic investors seeking a North American base could be interested.”
 
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