IMM Private Equity (PE) is seeking a deal advisor for the sale of pet commerce company Pet Friends, but the process has been proceeding more slowly than anticipated, drawing attention to the underlying reasons for the delay.
Although plans to sell Pet Friends have been formalized, GS Retail, which acquired a stake in Pet Friends alongside IMM PE in 2021, has not yet clarified its intentions regarding exercising its right of first refusal or selling its stake. As the strategy for marketing the sale depends on GS Retail’s decision, IMM PE is expected to select a sale organizer once GS Retail makes its intentions clear.
IMM PE began preparations for the sale of Pet Friends late last year but has yet to finalize the sale schedule, according to people with knowledge of the matter on April. 1. As part of their due diligence, prospective sale organizers, including both domestic and international firms, are evaluating the company to identify its key selling points.
IMM PE and GS Retail jointly acquired Pet Friends in July 2021. IMM PE is the largest shareholder with a 65.8% stake, GS Retail holds a 30% stake, and Pet Friends founder and former CEO Kim Chang-won holds a 2.2% stake. IMM PE and GS Retail had invested 150 billion won at the time, including 100 billion won to acquire shares from existing shareholders and 50 billion won in a rights issue for new paid-in capital. IMM PE raised 117.5 billion through its Rose Gold 4 fund, and GS Retail reportedly invested 32.5 billion.
Industry insiders anticipate that GS Retail’s decision will influence the direction of the sale. GS Retail holds both the right of first refusal to buy IMM PE’s share and a co-sale right to divest its stake simultaneously with IMM PE. GS Retail has yet to clarify its intentions, but the company will likely choose to sell its stake in Pet Friends together with IMM PE, according to people familiar with the matter. This speculation is supported by GS Retail Vice Chairman Heo Yeon-soo, mentioning the possibility of reorganizing its business portfolio and overlapping business interests with its subsidiary, About Pet.
Given GS Retail’s involvement in the pet industry, the possibility of the company acquiring Pet Friends is not entirely out of the question. But such a move appears unlikely considering the company’s current financial state.
GS Retail has invested 307 billion won in food delivery platform Yogiyo, 65 billion won in online taxi-hailing service Kakao Mobility, and 508 billion won in real-time logistics service Vroong, all currently operating at a loss. As a result, the company’s focus has shifted towards enhancing profitability rather than increasing investments.
