Carlyle to consolidate Seoul office, putting ADT Korea back up for sale

The Carlyle Group will consolidate its South Korean operations divided into buyout and growth capital units by combining them, after the three-men growth capital unit focusing on minority stake deals was believed to have lost one or two managers recently.

Carlyle’s Seoul office will be now run by four to five managers headed by Sanghyun Lee, a managing director, according to investment banking sources on July 18.

The move comes as the US private equity firm is preparing the sale of ADT Korea, a securities service provider, which has an estimated enterprise value of 2.5 trillion won ($2.2 billion).

It is known that Carlyle is putting the South Korean company up for auction, after its attempted sale through private deals fell through last year. Carlyle had acquired 100% of ADT Korea for $1.93 billion in 2014.

Carlyle’s growth capital division has invested in a number of South Korean companies, including OEM clothing manufacturer Yakjin Trading Corp., cable TV operator Hyundai HCN and Topia Education Inc.

But like many other global private equity funds, Carlyle has suffered from delayed exits and a lack of fresh deals in South Korea.

Now some of its global rivals are shifting their attention to minority stakes in South Korean companies amid the lack of attractive buyout targets.

TPG has agreed to acquire a 30% stake in South Korea’s top taxi-hailing application for 500 billion won in its first investment in South Korea in over a decade.

Kohlberg Kravis Roberts & Co (KKR) is in negotiations to buy about a 30% stake in LS Automotive Corp., an automotive electric parts maker. KKR is understood to have suggested the minority stake purchase, instead of a whole ownership offered by the LS Group.

CVC Capital and Bain Capital are vying for a 40% stake in Hanwha S&C Co. Ltd., an IT outsourcing company.

Their entrance into the minority stake sale market is stoking fears among homegrown private equity firms that they might be crowded out of minority equity deals, which used to be their niche market, by global competitors.

By Hugh YH Jeong

hugh@hankyung.com