South Korea’s Tmax Group took back its software developing unit sold to a local private equity firm two years ago to create synergy with its database business.
TmaxData Co., the group’s database management system (DBMS) unit, exercised a call option to buy back a 60.9% stake in TmaxSoft Co. from Skylake Equity Partners Ltd. for 820 billion won ($612 million) including the guaranteed 16% internal rate of return for the private equity firm on Thursday, said investment banking industry sources.
TmaxData regained TmaxSoft’s management control after paying some 800 billion won as Seoul-based Skylake has already taken the rest as dividends, the sources said.
Tmax Group sold the stake in TmaxSoft, an enterprise software developer, for 560 billion won to the buyout firm in March 2022 with a call option to purchase back the shares for two years from March 15, 2024. The group was supposed to guarantee at least a 16% internal rate of return for Skylake when exercising the option.
South Korean private equity firms including Cactus Private Equity provided money to the group’s buyback. Cactus and STIC Investments injected 1.1 trillion won into TmaxData. The group plans to use the remaining 300 billion won for debt repayment, business operations and others.
CASH COW
TmaxSoft, South Korea’s top middleware developer, is expected to play the role of a cash cow in the group. Middleware is a type of computer software program that lies between an operating system and the applications running on it.
The company’s operating profit rose 2.8% to 21.8 billion won in the first half from a year earlier as sales grew 8.5% to 64.8 billion won.
TmaxSoft is expected to create synergy with TmaxTibero Co., TmaxData’s wholly-owned database solution subsidiary with key clients including public institutions.
Tmax Group aims to establish a future growth structure centered on TmaxSoft, TmaxTibero and TmaxA&C.
The group’s artificial intelligence and cloud unit is developing a platform dubbed Tmax SuperApp, which allows users to create high-quality and competitive apps without professional coding technology.
The platform, an ambitious project launched by Tmax Group Chair Park Dae-yeon, is set to run in any environment without relying on specific operating systems, devices and app markets.
Write to Jong-Kwan Park at pjk@hankyung.com
Jongwoo Cheon edited this article.