(Reuters) – Asian private equity firm MBK Partners has put Techpack Solutions Co Ltd on the auction block, people familiar with the matter said on Monday, in a deal that could fetch up to 600 billion won ($565 million) for the South Korean bottler.
MBK, co-founded by ex-Carlyle Group Asia dealmaker Michael Kim, has hired Bank of America Merrill Lynch to run the process, one of the people said.
MBK, Techpack and BofA declined to comment on the process.
A sale of Techpack would add to the rising flow of private equity deal volumes building up in South Korea this year, a trend driven by banks willing to lend to buyers and by mature companies willing to sell.
Techpack supplies packaging products to domestic brewers Oriental Brewery Co Ltd and Hite Jinro, among others.
MBK bought Techpack in 2008 from South Korea’s Doosan Co Ltd for 392 billion won. The company, which makes aluminium cans and glass and plastic bottles, had earnings before interest, tax, depreciation and amortisation (EBITDA) of about 54 billion won over the past 12 months, one of people said.
The sellers, which are planning to contact public companies and private equity firms to partake in the auction, are putting a price tag on Techpack of more than 10 times its EBIDTA, one of the people said, or up to 600 billion won.
EBITDA is a measure of cash flow, which is important for private equity buyers and sellers because they typically borrow most of the money needed for acquisitions, and they need the cash for debt payments.
Container and packaging sector companies in the Asia Pacific region trade at 8.9 times EBITDA, according to data from StarMine. South Korean companies in the sector trade at 8.3 times, the data show.
MBK this month closed a $2.7 billion investment fund, its third fund and the second-largest buyout fund raised by an Asia private equity firm since the global financial crisis, according to Preqin data.
South Korea captured 35.9 percent of Asia private equity-backed merger-and-acquisition volume over the first three quarters, with $5.9 billion of deals, according to Thomson Reuters data. South Korea’s volume was up 3.8 percent from the year earlier, while overall Asia markets dropped 34.3 percent to their lowest levels since 2010.
That volume take up was helped by MBK’s agreement in August to buy ING Groep’s South Korean insurance unit for $1.65 billion. The firm has also acquired Japan coffee chain Komeda Co, and paid $520 million for a stake in Korean clothing company NEPA.