Given that Seoul is roughly 50 kilometers from the North Korean border, any potential instability is bound to have an effect on the South’s economy. However, the South Korean people and government have long been used to such disturbances and are well adapted to dealing with them and these events have had little effect on day to day business in South Korea.

The Korea Composite Stock Price Index (KOSPI) initially sank as news of Kim’s death spread, ending 3.4 percent down by the end of trading December 19. However the KOSPI closed up 0.91 percent higher on the following day at 1,793.06 on Tuesday indicating that the loss is likely a short-term reaction.

Though there were no immediate signs of military movements or any aggressions from the North, the South Korean government has rushed to reassure domestic and foreign parties that it is prepared to deal with any and all contingencies. President Lee Myung-bak put government officials on emergency response status and all military units were put on high alert.

South Korea’s economic and financial authorities showed an equally proactive response.  On Monday December 19, Minister of Strategy and Finance, Bahk Jae-wan led a meeting to organize a strategic response to the news. The Ministry of Strategy and Finance posted a press release which outlined some of the measures to be taken, which include the establishment of a multi-ministry emergency countermeasure team to monitor the economic effects of the situation while taking steps to stabilize markets if necessary.

Credit ratings agencies have also weighed in on the situation,  saying that the  North Korean leader’s death is unlikely to affect South Korea’s  credit rating.

Aside from an understandable degree of anxiety, the public reaction to the situation has been orderly and uneventful here in Seoul. Some have even expressed optimism, speculating that the North Korean leader’s death will lead to an improvement in inter-Korean relations.

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Affinity has had no real landmark deals in Korea after its 2007 sale of Highmart, Mando in 2008 and, The Face Shop in 2009. After Posco’s acquisition of Daewoo International, they took an interest in its 24 percent stake in Kyobo and started negotiations.

Carlyle is said to have similar interest in the deal. They did the Hanmi Bank buyout deal between 2000 and 2004, but since then the firm’s track record in Korea has been unimpressive.

The current CEOs have worked together and are on amicable terms. Therefore, a consortium can reasonably be expected between these PE firms.

Kyobo executives, including CEO Shin Chang Jae, welcome this development. If another company acquires the 24 percent stake and purchases additional shares from other investors, Mr. Shin’s control over the firm might be challenged, but not if the stakes are divided among several players.

Source: the bell

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“Global private equity funds Texas Pacific Group (TPG) and Warburg Pincus are setting up Korean offices and re-entering the Korean market after a 10 year absence.

According to a statement given by TPG’s Hong Kong branch on the 17^th, they are establishing an office under the name of Texas Pacific Asia and have selected a Korean-American to be partner. New York’s Warburg Pincus has also appointed a Korea manager to work out of its Hong Kong office and is looking to re-enter the Korean market.

A TPG representative in Hong Kong said “TPG has opened a Korea office under the name of TPA” and continued to say, “TPA plans to concentrate more on mezzanine investments instead of the buyout strategy we pursued during the foreign exchange crisis.”

TPG said it has been researching Korea’s M&A market since last January.  In the past, TPG gained a reputation for pursuing aggressive buyouts and short term profits. However, for their re-entry to the market they have made a 180 degree change in their investment strategy. Company representatives explained that they are concentrating on sourcing mezzanine investments such as convertible bonds or warrant bonds.

TPG first entered the Korean market in 1999 when, in a JV with Blum Capital called Newbridge Capital, they acquired Korea First Bank. In 1999, Newbridge, then represented by Vogo Fund’s CEO Byungmoo Park, successfully took over Korea First Bank then formed a consortium with AIG to acquire Hanaro Telecom.

In 2005 Newbridge passed Korea First Bank on to Standard Chartered for a profit of 1.01 trillion won. In 2007, Newbridge saw 500 billion won in profits from its sale of Hanaro Telecom to SK Telecom. However, after being swept up in the so-called Meok-twi (eat and run) controversy, they decided to pull-out of Korea.

Warburg Pincus also had a rough time during its experience in Korea. In October of 2003, the fund, then part owner of LG Card, was indicted on charges of acting on insider information in its sale of shares in the card company in order to avoid losses in the liquidity issues the company developed a month later. In 2007, they were assessed a fine of 50.3 billion won and Warburg Pincus’ Korea-head Seongjin Hwang was sentenced to 4 years in prison.

Rather than setting up a Korea office, Warburg Pincus plans to use resources in Hong Kong to search for opportunities in Korea. Warburg Pincus is looking to operate similarly to Kohlberg Kravis and Roberts by securing living space somewhere in Korea where personnel from its Hong Kong office can come and go as needed. In 2009 KKR successfully acquired OB Beer and more recently participated in bidding during Samsung Group’s sale of iMarket Korea.  Warburg Pincus’ Korean investment representative said they have been going back and forth between Hong Kong and Korea, researching government officials’ attitudes and opportunities in the local market.

An industry official stated, “Recently, regional funds like MBK and Hahn & Company which are independent of large American funds are performing well in Korea and now the traditional American PE funds are beginning to show considerable interest in the market.” The official went on to explain, “In China’s case, competition is high and there is a large political risk, but due to its stable market and the profits that were made here during the Asian financial crisis, funds are starting to concentrate on Korea again.”

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사업 확장, 신시장 진출, 기업 인수 등을 통해 성장을 모색하는 기업에 자본을 제공하는 바이인 사모펀드는 급성장하는 아시아의 특성과 잘 맞아 유럽, 미국보다 아시아에서 그 수와 규모가 더 큽니다. 사모펀드 조사기관 프레킨에 따르면, 아시아에 집중하는 성장자본 펀드는 73개 218억달러로 벤처 캐피탈 다음으로 크고, 바이아웃 펀드보다 훨씬 더 큽니다.

인수한 기업의 구조조정을 돕는 것이 본질인 바이인 펀드는 변화를 통해 기업가치만 증대시키는 것이 아니라, 기업이 속한 산업과 국가 경제도 함께 발전시킵니다. 사모펀드의 자본을 통해 한국 기업은 신시장 진출 및 신상품 출시로 매출 증가를 도모할 수 있고, 이러한 과정을 통해 한국 기업과 관련 산업은 지역 내 동종기업보다 비교 우위를 점할 수 있습니다.

사모펀드는 성장을 도모하는 기업에 성장자본만 제공하는 것이 아니라 국제 경영 경험, 글로벌 네트워크, 경영 및 재무적 신인도, 견실한 기업 지배구조, 추가 자금 조달원에 대한 접근, 기업 이미지 및 브랜드 제고 등 다양한 부가가치 즉, ‘사회적 자본’도 제공합니다. 일류 사모펀드는 투자한 기업이 속한 산업에 관한 세계적 전문성을 제공하며, 통상 창업자 가족들로 구성된 이사회에 새로운 전략적 관점을 제시하기도 합니다.

잘 알려지지 않은 사모펀드 투자의 이점으로 기업의 평판 제고를 들 수 있는데, 이것은 돈으로 환산할 수 없는 더 큰 가치가 있습니다. KPMG 조사에 따르면, 사모펀드는 인수한 기업에게 유리한 자금 조달조건 형성, 우수 인재 채용, 고객 및 협력업체와 관계 향상, 기업 경쟁력 제고 등의 부가가치를 더해주며, 이는 기업을 국내외 증시에 상장할 때 특히 유리하게 작용합니다.

사모펀드가 제공하는 다른 주요한 사회적 자본은 ‘글로벌 네트워크’입니다. 사모펀드는 투자한 기업들의 국제적 상호 협력을 통한 거래비용 감소라는 전략적 제휴를 이끌어내고, 한국 기업에게 신시장 진출을 도우며, 기 진출 기업들의 경험을 얻을 수 있게 합니다.

경영 전략 면에서 보면, 사모펀드는 투자한 기업을 통해 수익을 창출하기 위해 경쟁력 강화, 낭비요소 제거, 경영 효율성 제고, 신 시장 진출 혹은 새 고객 발굴 등에 의한 매출 증대 등을 통해 기업의 새로운 능력을 배양시킵니다. 이 점은 ‘언스트 앤 영’의 2007년 연구를 통해 입증됐으며, 유럽의회를 위한 연구 자료에서는 사모펀드가 투자한 기업의 매출, 법인세차감전영업이익(EBITDA), 이윤 증가율이 상장 기업보다 더 높게 나타났습니다.

흔히 사모펀드를 ‘먹튀’로 알지만, 그런 표현은 적절하지 않다고 봅니다. 사모펀드는 일반적으로 장기투자를 하는데, 이는 기업 경쟁력을 강화시켜 기업 가치를 끌어올리는 데 오랜 시간이 필요하기 때문입니다. 하버드 경영대학원 조쉬 러너교수가 세계경제포럼을 위해 실시한 연구에서 1980년에서 2007년 기간 중 사모펀드가 매수한 기업의 69%는 2007년 11월 까지 여전히 소유하고 있었습니다. 대부분 사모펀드는 투자지분을 매각한 후에도 자문역이나 파트너 역할을 계속 담당합니다.

150개 성장자본형 사모펀드와 벤처 캐피털이 향후 18개월간 아시아 기업에 430억달러를 투자할 계획입니다. 물론 수익률 극대화가 이들의 목표지만, 이 과정을 통해 수많은 아시아 기업이 글로벌 기업으로 발전할 수 있을 것입니다. 한국 기업이 보다 적극적으로 사모펀드 투자를 받아들이고, 그들의 사회적 자본을 통해 경쟁력을 보완한다면, 이들의 투자는 한국 기업의 성장과 한국의 경제발전에 기여할 것입니다.

브렛 모펫 코트라 인베스트 코리아 금융 컨설턴트

Source: 머니투데이

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The report cited Korea Finance Corp (KoFC) as saying that the state-run financial firm has formed a shareholders’ group of KAI, aiming to sell at least a 50% interest  plus one share by the end of 2011.

Korea Finance Corporation has a 30.1% stake in the defense company while Samsung Techwin, Hyundai Motor and Doosan DST hold 20.5% stakes each. The potential stake sale will likely be carried out after the shareholders list KAI on South Korean bourse in this June, it added.

KAI recorded revenues of KRW 1tn (USD 898m) and a net profit of KRW 90bn (USD 81m) in 2009.

Source: Yonhap News (translated)

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The report cited industry sources as saying that the two parties have scheduled to finish the negotiation over the final offer of M&M by 19 November and will need to brief the administration court. According to the item, once the court approves the sale terms, they will ink a sale agreement.

According to an earlier report, M&M made a final offer of a price less than its initial offer of KRW 535bn (USD 470m) following the completion of due diligence.

Source: Money Today (translated)

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QNET_AAMA_PPT(3Min)

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BSI Semiconductor is a distributor of electronic products mainly operating in South Korea and South Asia.

The acquisition will allow WT Microelectronics to enter the supply chain of electronic products in South Korea and become a leading distributor of semiconductors in South Korea.

BSI Semiconductor posted approximately USD 39.27m in operating profits for 1H10 with a gross profit ratio of around 9.2%.

Source: Now News (translated)

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Netruck is an unlisted South Korean liquid fuel provider and has a turnover of KRW 38.5bn (USD 32.5m) in 2009.

I. Overview

1. Assets to be sold: 33.67% (1,237,188 shares) equity stake in SKCTA Corporation held by Korea Container Terminal Authority
2. Method of sale : Public competitive bidding

II. Sale Process

1. Acceptance of Letters of Intent, etc.

• a. Period of submission: From 29 July 2010 up to 16:00 on 12 August 2010 (Seoul Time)
• b. Place of submission: Management support team at Korea Container Terminal Authority (15F, World Marine Centre, 1390, Hwanggil-dong, Gwangyang City, Junranam-do, Korea)
• c. Submission method: In person or by post (it would not be received via fax nor email)
• d. Documents to be submitted: Letter of Intent, Introduction of Bidder, Confidentiality Agreement
• The documents to be submitted can be downloaded at the website of the seller, http://www.kca.or.kr.

Source: KCTA Website

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The report cited industry sources as saying that the Dallas, Texas-based fund has failed to find a buyer, and plans to resume the sale around end of August.

According to the report, Lone Star is considering selling the stake via private placement.

Citing the sources, the report claimed that the last potential buyer for the stake, MBK Partners, has walked away from the deal, as it found Lone Star’s expected price of KRW 18,000, per share, too high.

Update: MBK Partners yet to walk away from deal, plans to submit proposal

MBK Partners has yet to walk away from the sale of a 51% stake in Korea Exchange Bank by Dallas, Texas-based Lone Star, reported Maeil Business, Friday.

The report, which cited other media reports, claimed that the South Korean private equity fund is planning to submit a proposal by the end of this month.

Credit Suisse, the financial advisor for the sale, declined to comment on the news, it added.

See here for previous posts on the sale.

Source: E-Today (translated), Maeil Business (translated)

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