United Asset Management Company (UAMCO) is dissolving the corporate restructuring private equity fund (PEF) used to acquire STX Engine (077970), in a move expected to lead to the sale of management control of the shipbuilding engine maker.
According to investment banking industry sources on Tuesday, UAMCO is currently in the process of dissolving the "UAMCO Corporate Rebound No. 8 Corporate Financial Stability Private Equity Limited Partnership." UAMCO holds a 61.68% stake in STX Engine through this fund.
Restructuring-purpose funds are typically operated on the premise of asset recovery within their maturity period. As it is difficult to maintain holdings for an extended period after the fund's lifespan ends, the market is interpreting this fund dissolution as a signal that an STX Engine sale is imminent. The move marks the beginning of an exit process roughly seven years after UAMCO acquired management control of STX Engine in 2018 by injecting approximately 280 billion won.
UAMCO has led STX Engine's business restructuring with a focus on defense and ship engine operations. The company is widely regarded as having significantly increased in corporate value amid the recent industry upturn. In addition, as a shortage of gas turbines emerged due to expanding power demand from U.S. data centers, STX Engine's share price has risen sharply on the back of its medium-speed engine technology for land-based power generation, which serves as an alternative power source. This presents UAMCO with what could be considered an optimal timing for recovering its investment.
Industry watchers expect UAMCO to soon begin work such as tapping potential buyers and reviewing sale structures. The sale process, including the selection of a lead manager, has not yet begun. However, observers say it is highly likely that internal review of recovery scenarios has already started. Given that the market capitalization of an enlarged STX Engine has recently surged to more than 1.6 trillion won, some observers suggest a block deal could be pursued to reduce the burden of the sale.
"UAMCO has begun the fund dissolution process, but it has not yet entered the stage of full-fledged review regarding the sale of its STX Engine stake," an IB industry official said. "Once the K Shipbuilding sale that UAMCO is currently conducting is completed, related work will take shape."
