Korean lenders to Accell warn they may boycott KKR

KKR & Co. is facing a huge backlash from South Korean financial services firms after the debt restructuring of Dutch bicycle manufacturer Accell Group, which the private equity firm acquired in 2022, caused heavy losses.

They criticized KKR’s lack of communication before reaching the debt write-down agreement, which they said heightened its reputational risk. Some of them warn they may boycott the buyout firm in future investments.

Ten South Korean financial services companies poured a combined 200 billion won ($136 million) into Accell Group to fund KKR’s €1.56 billion ($1.5 billion) purchase of the European bike company.

“The Accell acquisition financing damaged our trust in KKR,” said an official at one of the financial services firms. “We’ll never participate in KKR’s fundraisings in the future.”

Shinhan Securities Co. arranged the 200-billion-won debt financing. Debts amounted to 61% of the takeover cost.

It sold down the debts to 10 domestic firms in 2023. They include the National Federation of Fisheries Cooperatives (Suhyup), Kookmin Bank, Hana Bank, Hyundai Marine & Fire Insurance Co., Meritz Fire & Marine Insurance Co., DB Insurance, Korea Investment & Securities Co. and KB Securities Co.

In 2024, they booked the investment as losses.

Less than one year after KKR’s acquisition, the bicycle maker ran into financial difficulty and suffered a heavy loss in value.

Last month, the US investment firm managed to win the approval of a majority of creditors to mark down 40% of Accell’s debts and extend their expiration dates, despite Korean lenders’ opposition. Some of them sold them to non-performing loan investors.

Lenders also swapped some debts into equities, representing a 10% stake in Accell. Under the deal, Korean institutions secured a 1-1.5% stake in Europe’s largest bike maker. They did not participate in its rescue financing.

Another official at one of the Korean lenders said KKR had hardly been reachable for direct communication to discuss the investment losses from Accell.

“Now that the risk is resolved, they are talking about improving relations,” he complained.

Last year, KKR initially proposed a 75% debt write-down for Accel, but Korean lenders refused it. Some of them sent a protest letter stating they might prevent KKR from doing business in Korea.

Write to Ji-Eun Ha at hazzys@hankyung.com
 


Yeonhee Kim edited this article.