KKR secures $1.2 bn exits in Korea for two Asia funds

KKR & Co. has sold a modern logistics facility it had developed in a South Korean port in a transaction estimated to be worth more than 200 billion won ($168 million), following its profitable exit from the world’s top copper foil maker based in the country in a 1.2 trillion won deal in mid-2019.

The private equity firm announced the sale of BLK Pyeongtaek Logistics Center, completed in early 2019, to Seoul-based Pebblestone Asset Management on Feb. 3, without disclosing financial terms.

Market sources estimated the transaction for the 136,000 square-meter warehouse to be worth more than 200 billion won.

KKR had spent about 150 billion won, including borrowings, jointly with South Korea’s Mastern Investment Management Co. Ltd. and BearLogiKorea Co. Ltd. to buy the land and build the facility in South Korea’s fifth-largest harbor by cargo volume.

The investment had been made from KKR’s $6 billion Asian Fund II.

In June 2019, KKR sold 100% of KCF Technologies Co. Ltd. (KCFT), the producer of copper foils used in lithium-ion batteries for electric vehicles, to SKC Ltd., a manufacturer of chemicals and materials, for 1.2 trillion won, four times its purchase price.

The investment was made from its $9.3 billion Asian Fund III launched in 2017.

It also entered negotiations in late 2019 to sell top Korean online shopping platform TMON Inc., short for Ticket Monster, to the country’s retail giant Lotte Group for about 1.3 trillion won, according to investment banking sources.

KKR and Seoul-based Anchor Equity Partners Ltd. bought a combined 80% of the ecommerce company in 2015. KKR made the investment from Asian Fund II.

MISSING IN 2019 KOREAN BUYOUT MARKET

Despite its profitable exits in Korea including the $5.8 billion sale of Oriental Brewery Co. Ltd. back to Anheuser-Busch InBev in 2014, KKR was virtually “missing” in Korea’s buyout market in 2019, an investment banking source said.

It failed to win any of three public tenders it participated in last year.

While the auction for South Korea’s biggest online gaming firm Nexon Co. Ltd. was abruptly cancelled due to the lack of strategic bidders, KKR lost to Asia-focused Unison Capital and  Macquarie in two other deals in South Korea in 2019.

For a $800 million stake in LG CNS Co. Ltd., LG Group’s IT service unit, KKR had been in exclusive talks with LG Group.

But as LG Group shifted to a public tender for the 35% stake, Macquarie won over KKR with attractive proposals for a business partnership and new businesses, even if both bidders offered similar prices.

“Non-price factors such as global networks are becoming important in recent M&A deals. But KKR has not made attractive offers. It may be because of its small size in Korea,” said a private equity fund source in Seoul.

KKR had five private equity managers in Seoul as of late 2019.

In the competition for 3D dental scanner maker Medit Corp., Unison Capital secured the 300 billion won deal.

KKR recently embarked on a new fundraising campaign for its fourth Asia buyout fund for $12.5 billion, a record amount for the region.

Last month Shinhan Financial Group said that its subsidiaries would commit $200 million in aggregate to two KKR funds of funds tailor-made for the South Korean banking group.

Write to Hyun-il Lee and Riahn Kim at hiuneal@hankyung.com">

hiuneal@hankyung.com