Busan EP to Acquire NexFlex... MBK's '17% Reinvestment' Saves 900 Billion Won Deal [fn Market Watch]

[Financial News] The sale of NexFlex, which had been stalled for a long time amid financing difficulties, has found a breakthrough with reinvestment by its existing major shareholder, MBK Partners.
South Korean private equity firm Busan Equity Partners (Busan EP) is acquiring NexFlex for about 900 billion won, while MBK Partners plans to retain a 17% stake and seek additional returns from a future increase in the company's value. The deal structure, in which the seller's reinvestment eases the buyer's funding burden, has been finalized.
According to investment banking (IB) industry sources on the 13th, MBK Partners signed a share purchase agreement (SPA) the previous day with the Busan EP consortium for the sale of control of NexFlex. The transaction is valued at about 900 billion won based on a 100% stake. Deutsche Bank is advising on the sale.
The key to the deal is MBK Partners' reinvestment. MBK Partners plans to reinvest part of the sale proceeds to secure a 17% stake. Busan EP and its partners will hold the remaining 83%. Based on the value of the entire equity stake, MBK Partners' remaining stake is worth about 153 billion won.
The structure reduces the amount of equity Busan EP needs to raise from external investors, while allowing MBK Partners to expect additional investment returns even after selling control.
Busan EP's acquisition process had not been smooth. It secured exclusive negotiating rights last February, but talks dragged on as it encountered difficulties raising funds. The sale process subsequently shifted to competitive bidding, and the withdrawal of Taekwang Industrial Co., Ltd., which had been part of the consortium, meant the financing structure had to be reworked.
The signing of the definitive agreement gained momentum after acquisition financing arrangers including Shinhan Investment & Securities, DB Securities Co., Ltd., and Daol Investment & Securities Co., Ltd. obtained approval from their internal investment review committees. However, securing the remaining funds and executing the acquisition financing remain variables until the transaction closes.
Meanwhile, MBK Partners' investment performance is also drawing attention. Since acquiring NexFlex from SkyLake Equity Partners for about 530 billion won in 2023, the value of its stake has risen to about 1.7 times its original level in three years. However, since it is reinvesting part of its stake, the ultimate return will depend on the results of future stake sales.
NexFlex manufactures flexible copper-clad laminate (FCCL), a key material for flexible printed circuit boards (FPCB). Last year, it recorded revenue of 269 billion won and operating profit of 75 billion won. These figures rose by about 65% and 83%, respectively, from the previous year, and its operating margin reached about 27.9%.
IB industry sources say the deal is structured to prioritize easing the buyer's financing burden and sharing future investment returns over the seller's full recovery of its investment. One IB industry source noted, "Even if the reinvestment served as a breakthrough in signing the definitive agreement, closing the transaction is a separate matter, so the remaining financing conditions are likely to be a key variable."


[email protected] Kim Kyung-ah Reporter