APAC: MIRA acquires stake in Korean security services firm

08 May 2018 - 12:00 am UTC

Macquarie Infrastructure and Real Assets (MIRA) has agreed to invest KRW 574bn (USD 531.8m) to acquire a 45% stake in Korean security services firm ADT Caps.

MIRA’s partner SK Telecom said in a disclosure to the stock exchange yesterday (8 May) it had agreed to pay KRW 702bn for the other 55% stake in ADT Caps’ parent company Siren Holding Korea.

SK Telecom and MIRA are also assuming Siren’s KRW 1.77trn debt giving an enterprise value of KRW 2.97trn and a price of 11x EBITDA.

It is understood that more than one MIRA fund is involved in the transaction.

Carlyle Asia Partners IV and Carlyle Partners VI acquired Tyco Fire and Security Services Korea and its subsidiaries ADT Caps, Capstec and ADT Security in May 2014 in a USD 1.93bn  (KRW 1.97trn) cash deal. Carlyle had then secured debt financing from Korea Exchange Bank, Kookmin Bank, Industrial Bank of Korea, Korea Investment & Securities and UBS. The 2014 transaction was at a multiple of 3.4x 2013 sales and 11.4x 2013 EBITDA.

Siren Holdings Korea’s revenues were KRW 721.7bn in 2017 while its net income was KRW 10.79bn. The company reported losses of KRW 91.77bn in 2016 and KRW 81.78bn in 2015.

Within two months of the merger announced this week, Siren Investments Korea Co will be merged with and into Siren Holdings Korea. After the merger, Capstec and ADT Security will also be merged into the Siren Holdings Korea, which wholly-owns ADT Caps.

In 2014, ADT Korea had 475,000 small-and-medium-sized businesses, commercial and residential customers. Only 9% of its revenues were non-recurring, with central monitoring recurring revenues accounting for 74% and contractual guarding revenues accounting for 17% of the total.

I​​​​ts customer base has expanded to 570,000 since Carlyle’s acquisition,

Carlyle declined to comment on the MIRA / SK Telecom acquisition.

A person familiar observed that given that ADT and Samsung dominate Korea’s security industry, it would be difficult for competitors to duplicate ADT Caps’ position as the country’s second largest physical security provider. This gave comfort in terms of market share and the cash flow characteristics of the asset the source said.

ADT Caps is a leading advanced security monitoring and dispatch service provider. It provides central monitoring services, including video surveillance and dispatch, access control as well as guarding.

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