South Korea’s LG Chem Ltd. has agreed to sell its water filter business – the world’s second-largest producer of reverse osmosis membranes – to Glenwood Private Equity Co. for an estimated 1 trillion won ($692 million), as the chemicals giant accelerates efforts to shore up its balance sheet amid growing market uncertainty.
According to people familiar with the matter on Monday, LG Chem has selected Seoul-based Glenwood PE as the preferred bidder for the deal and is finalizing the detailed terms of the transaction.
The sale will be structured as a carve-out, with the new owner expected to acquire the unit’s assets, workforce and intellectual property by establishing a newly created company.
The move comes as LG Chem seeks to navigate a downturn in the petrochemical sector and a tougher global trade environment, exacerbated by the Trump administration’s protectionist policies.
Reverse osmosis membrane filter (Courtesy of LG Chem) Analysts said the sale reflects LG Chem’s broader strategy to preemptively bolster liquidity and focus on core growth areas such as batteries and sustainable materials.
The water filter business, which manufactures high-performance reverse osmosis (RO) membranes used for desalination and industrial water treatment, generated mid-200 billion won in revenue last year, with an operating profit of 90 billion won and 64 billion won in earnings before interest, taxes, depreciation and amortization (EBITDA).
RO membranes, used to remove salt and other pollutants from water, play a key role in wastewater treatment units.
The deal values the unit at roughly 20 times EBITDA, reflecting its strong market position and growth potential, sources said.
Glenwood Private Equity is a leading alternative investment firm that focuses on buyout opportunities in Korea LG Chem entered the water filter business in 2014 by acquiring US-based NanoH2O. Leveraging its patents and expertise, LG Chem rapidly expanded production at its Cheongju plant in Korea.
Within just over a decade, the business grew to claim a 21% global market share, second only to Japan’s Toray Industries Inc.
CARVE-OUT STRATEGY
Glenwood PE, established in 2014, specializes in a carve-out strategy, which involves acquiring non-core businesses and increasing their enterprise values to sell them.
The private equity firm is said to be planning to invest 200 billion won to expand manufacturing capacity post-acquisition, with ambitions to elevate the business into a top-tier global player.
Glenwood PE already acquired Techcross Inc., the water treatment unit spun off from LG Electronics Inc., and bought LG Chem’s diagnostics business, building a track record of stable post-acquisition investment and employment – a key factor in securing the latest deal over global private equity competitors.
The latest deal also follows the sale of LG Chem’s aesthetics business to Glenwood PE for about 500 billion.
LG Chem is expected to continue its portfolio restructuring, with analysts predicting the possible sale of its battery separator business as it refocuses on high-margin, high-growth segments.
Write to Jun-Ho Cha and Jong-Kwan Park at chacha@hankyung.com In-Soo Nam edited this article.
