MBK Partners to Sell Controlling Stake in South Korean Maker of Air Purifiers

By Rick Carew in Hong Kong and Kwanwoo Jun in Seoul 

Private-equity firm MBK Partners LP has kicked off a sale of its controlling stake in South Korean air purifier maker Coway Co., in the latest multibillion-dollar sale out of South Korea.

Goldman Sachs Group Inc., which is advising MBK Partners on the sale, sent out initial financial information, known as a "teaser," to prospective buyers on the South Korean company that sells water and air-purifiers, according to a person with knowledge of the situation. Potential bidders for MBK's 31% stake, worth more than $2 billion, could include both private-equity firms and industry buyers.

The sale comes as private-equity investors look at another big South Korean asset that is on the block: U.K. retailer Tesco PLC could raise up to $7 billion from its disposal of its South Korean operations. Second-round bids are due later this month.

Coway, which has a market cap of more than $6 billion, sells purifiers with service packages that include regular cleaning and filter replacement. Those regular visits give Coway's 18,500-strong sales force an opportunity to pitch other products like electronic bidets and mattresses to customers.

MBK bought its Coway stake in January 2013 for $1.1 billion from Woongjin Holdings Co. after that conglomerate's real-estate-related business got in trouble.

Since then, MBK increased the company's cash flow margins to 28.7% last year from 23.7% in 2012. Coway has in recent years pushed into China, the U.S., and Malaysia.

MBK Partners is a pan-Asia private-equity fund managing more than $8.1 billion. It was founded in 2005 by a group of partners that worked together at Carlyle Group LP on Asian investments.

Private-equity firms are expecting 2015 to be a major year for exits across the region as they want to return capital to investors. Last month, MBK signed a deal to sell Taiwan's largest cable-television operator for $2.3 billion and sold Chinese waste-to-energy company GSEI Investment Corp. to Beijing Enterprises Holdings Ltd. in December.

In a statement to the local stock exchange, Coway said its biggest shareholder was considering a number of strategic options, including a stake sale, and that it would report more information to investors within a month. It gave no details on potential buyers.

Coway shares closed down 8.7% at 95,400 won ($82) on Monday; the broader market was down 0.4%.

Write to Rick Carew at [e-mail] and Kwanwoo Jun at [e-mail]

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