Daesung Industrial Gases, one of the biggest players in South Korea’s industrial gases market, is reportedly the subject of an auction process that would see the Goldman Sachs Group relinquish its controlling stake in the company.
Producing oxygen and nitrogen, among other industrial and specialty gases, for a wide range of industries, Daesung Industrial Gases is the second-largest player in the South Korean market, just behind Tier One multinational Air Products.
According to published sales figures provided by local publication iGas Journal, the company recorded 2015 sales of $514m – up 23.4% over its sales the prior year (2014).
Such performance and market position has clearly made Daesung Industrial Gases an attractive asset. According to the Wall Street Journal, the Goldman Sachs Group could be set to cash in on this saleability, having sent out financial details of the operation to prospective buyers including private equity firms, South Korean conglomerates and global industrial gas competitors and invited bids for the entire company.
The Wall Street-based bank would likely make a swift return on its investment. A Goldman Sachs-led consortium acquired its 68% controlling stake in Daesung Industrial Gases for around $400m in July 2014; various reports suggest any sale could now represent anywhere between $1.3bn to $2bn.
Market share intensifies
The growing South Korean industrial gases market has been the subject of several key developments in recent months, as market share in the region intensifies.
Linde Korea signed a definitive agreement to acquire the onsite and bulk business of Air Liquide Korea in October, which will see the company procure 10 gas production plants including all related storage tanks, equipment and supply contracts in the acquisition and will integrate Linde’s existing business portfolio synergies in the domestic market. The deal is subject to mandatory approvals by the Fair Trade Commission of Korea.
Air Products also announced in October that it is to build a new large air separation unit (LASU) in the industrial powerhouse of Ulsan, as demand for gases in the region continues to increase. Meanwhile Praxair, currently the third-largest player in South Korea in terms of market share, furthered its footprint in the country in September with a long-term contract to supply industrial gases to Hyundai Oilbank, under which it will build, own and operate four new vacuum pressure swing adsorption (VPSA) plants.