KKR, Macquarie race for $728 mn stake in Korea’s KT Cloud

Global private equity giants Kohlberg Kravis Roberts & Co. (KKR) and Macquarie Asset Management are among the preliminary bidders for shares worth up to 1 trillion won ($728.3 million) in KT Cloud, South Korea’s No. 2 cloud service provider.

KT Cloud, spun off from the country’s telecom behemoth KT Corp. in April, held a preliminary bid to sell a 10-20% stake last week, according to private equity industry sources in Seoul on Sept. 2.

About 20 investors participated in the bid including local names such as IMM Holdings Inc’s subsidiary IMM Credit & Solutions, PE firm VIG Partners’ alternative credit investing platform VIG Alternative Credit and Mirae Asset Global Investments Co.

KT, which targets a corporate value of 4 trillion won through the fundraising, plans to shortlist preferred bidders this week and select two to three buyers later. An asset manager was known to have estimated KT Cloud’s enterprise value at higher than that level, according to the sources.

STRONG GROWTH POTENTIAL

Major PE firms were understood to have bet on the growth potential of South Korea’s cloud market, those sources said. The local public cloud service market is forecast to increase by 14.8% a year on average to 3.9 trillion won by 2025, according to a report by IDC Korea.

IMM Private Equity has already invested 200 billion won in major local managed service provider Megazone Cloud, in which the telecom juggernaut KT has a stake.

KT Cloud, established with 1.6 trillion won in kind and 150 billion in cash invested by KT, provides cloud services to the South Korean government and corporates while operating internet data centers.

KT Cloud enjoyed strong demand for corporate digital transformation (DX) with sales up 17% to 455.9 billion won last year.

Amazon Web Services Inc., a subsidiary of the world’s leading e-commerce operator Amazon, is dominating South Korea’s cloud sector with a market share of more than 50%, followed by KT Cloud, which accounts for some 20%.

The market’s competition intensified, given the rising presence of other service providers such as Naver Cloud Corp., spun off from the country’s platform giant Naver Corp., and Kakao Enterprise Corp., a subsidiary of Naver’s competitor Kakao Corp.

Write to Chae-Yeon Kim at why29@hankyung.com
Jongwoo Cheon edited this article.