[E-Daily Marketin, Reporter Soyoung Park ] Although the mergers and acquisitions (M&A) market froze in the first half of this year, it appears that many of the deals—which came as a welcome relief amid the drought—were concentrated in specific industries. This is because, as uncertainty grows, buyers are selectively investing in the artificial intelligence (AI) infrastructure value chain, where long-term demand is clear. The industry expects this trend to continue into the second half of the year, when the M&A market is expected to thaw.

Domestic M&A Market in First Half of the Year Dominated by AI-Related Transactions

According to the

domestic

investment banking (IB) industry on the 7th

,

M&A transactions concluded in the

first half

of this year were concentrated in the data center, energy infrastructure, and semiconductor industries. These are all sectors closely linked to AI.

A prime example is the equity transactions by SK Group affiliates, which are actively pursuing portfolio rebalancing. For instance, SK Telecom is proceeding with a deal to sell up to a 49% stake in its Ulsan AI data center to a consortium comprising KKR, IMM Investment, and StoneBridge Capital. The deal is reportedly valued at around the mid-2 trillion won range. The transaction will take the form of a three-party joint acquisition, with KKR acquiring a portion of the stake and the IMM Investment–StoneBridge consortium purchasing the remainder.

Two of SK Group’s energy infrastructure subsidiaries will be acquired by a consortium comprising Stick Alternative Asset Management (Stick Alternative) and Korea Investment Private Equity (KITP). This sale was pursued by SK Group to secure funding for an AI data center investment in the Ulsan region.

On the 1st, SK Gas announced that the transaction to sell a 49% stake in Ulsan GPS for 1.2242 trillion won had been finalized. Ulsan GPS is the world’s first 1.2 GW-class combined-cycle power plant capable of burning both LNG and LPG. SK Gas invested approximately 1.4 trillion won to bring the plant into commercial operation in December 2024. Even after this stake transfer, SK Gas will retain a 51% stake in Ulsan GPS and maintain its status as the largest shareholder.

In addition, SK Chemicals announced last April that it would sell a 49% stake in SK Multi-Utility (SK MU) to a consortium led by Stick Alter and Hantou PE for 371 billion won. SK MU is a subsidiary of SK Chemicals engaged in combined-cycle power generation.

Industry observers assessed that buyer demand in the first half of the year was concentrated on strategic industries with proven growth potential. Park Si-young, a partner at Kearney Korea, explained, “As M&A deals have concentrated in specific industries, valuations have risen, leading to a gap in expectations between sellers and buyers.” He added, “Sellers are asking for higher prices, while buyers, concerned about high levels of uncertainty, have not proceeded with deals across various sectors.”

M&A activity related to K-Beauty, which was brisk last year, has also been subdued this year due to these differing expectations. According to M&A research on the cosmetics industry released by MMP, an M&A advisory firm for small and medium-sized enterprises, the number of M&A deals involving domestic cosmetics companies reached 29 last year. The total transaction value hit a record high of 3.5934 trillion won. Notable examples include Gudai Global’s acquisition of Seorin Company, which led to consolidation among cosmetics brands; Welltoosi Investment’s acquisition of Encos, a cosmetics OEM/ODM firm; and VIG Partners’ acquisition of the medical beauty device company Viol and LG Chem’s aesthetics business division.

Sector Concentration Likely to Continue in the Second Half of the Year

The reason deals were concentrated in specific

sectors

during the first half of this year was due to increased macroeconomic uncertainty. Analysts note that the macroeconomy has slowed due to the prolonged conflict between the U.S. and Iran, and with interest rates on an upward trend, pressure on acquisition financing has intensified. Partner Park Si-young analyzed, “Given the high level of uncertainty, it is difficult to bet on growth potential,” adding, “As interest rates rise, the appeal of funding project funds through general financial institutions or capital firms diminishes, which has led to some hesitation.”

Experts forecast that the concentration on specific sectors will continue into the second half of the year. This is because the global market is also showing a trend toward AI concentration. According to the London Stock Exchange Group (LSEG), the value of global M&A transactions reached a record high in the first half of the year. This was driven by global companies increasing related transactions to secure technological capabilities as AI competition intensified. Transactions in the energy and power sectors were also active to prepare for the surge in power demand from AI data centers. There was also a rise in “carve-out” deals aimed at restructuring business models toward the AI sector.

An investment banking industry insider “In a situation like the current one, where liquidity is abundant but there is a wide gap in expectations regarding valuation, buyers have no choice but to focus on ‘separating the wheat from the chaff,’” adding, “In this sense, demand is bound to concentrate on deals that attract widespread interest. Therefore, we expect deals in semiconductors, data centers, and energy infrastructure to remain robust in the second half of the year, and we predict that activity in the beauty sector will resume if pricing expectations align.”