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Global PEFs strengthening ties with Korean banks

KB Financial Group Chairman Yoon Jong-kyoo, left, and Carlyle Asia Partners advisory team managing director John Kim / Korea Times file
KB Financial Group Chairman Yoon Jong-kyoo, left, and Carlyle Asia Partners advisory team managing director John Kim / Korea Times file

Carlyle, KB partnership follows after KKR, Shinhan ties

By Park Jae-hyuk

World-class private equity firms (PEFs) have begun forming stronger partnerships with banking groups here, showing an optimistic outlook for the domestic financial market's growth potential and stability, according to industry officials, Tuesday.

On June 18, the Carlyle Group announced it signed a memorandum of understanding (MOU) with KB Financial Group for a strategic alliance.

Through this alliance, they will draw on the respective strengths of their domestic and global networks to collaborate on new investment opportunities both in Korea and overseas.

While KB will work with Carlyle on the structuring and financing of the PEF's investments in Korea, Carlyle will use its Carlyle Asia Partners V buyout fund to invest 240 billion won ($200 million) in an exchangeable bond utilizing KB's treasury shares.

Among the 240 billion won it received from Carlyle, KB is expected to pay 210 billion won for the acquisition of Prudential Life Insurance Company of Korea.

"This strategic alliance will enable us to accelerate our global growth through close cooperation with Carlyle in discovering new investment opportunities, both in Korea and abroad," KB Financial Group Chairman Yoon Jong-kyoo said. "Equally, we believe that the strength of our domestic network will help Carlyle as it seeks to invest more into the Korean market."

Carlyle Asia Partners advisory team managing director John Kim said: "KB's leading position in Korea was a key factor in signing the MOU, as was the group's stable growth, strength of management, and deep credibility.

"The group has also demonstrated excellent risk management capabilities in the face of the economic downturn resulting from COVID-19. We look forward to starting this close partnership as we seek to build our presence in Korea."

This was the first deal Kim had signed since his appointment as the Carlyle Asia Partners advisory team managing director in October 2019.

When he moved to Carlyle from Goldman Sachs, the PEF vowed to continue to increase its investment in Korea, saying it saw compelling opportunities, driven by restructuring within the corporate sector, multinationals and chaebol looking to divest non-core businesses, and generational changes.

Analysts attributed the recent agreement to the undervaluation of Korean banks.

"The exchangeable bond was issued in favor of the issuer, so it means the global PEF values KB," Cape Investment & Securities analyst Kim Do-ha said. "The recent deal showed Korean banks have been severely undervalued."

Shinhan Financial Group Chairman Cho Yong-byoung, right, shakes hands with KKR Co-President Joseph Bae at the Shinhan Financial Group headquarters in Seoul, after signing a memorandum of understanding regarding a strategic partnership for global alternative investment on Sept. 21, 2018. / Courtesy of Shinhan Financial Group
Shinhan Financial Group Chairman Cho Yong-byoung, right, shakes hands with KKR Co-President Joseph Bae at the Shinhan Financial Group headquarters in Seoul, after signing a memorandum of understanding regarding a strategic partnership for global alternative investment on Sept. 21, 2018. / Courtesy of Shinhan Financial Group

KKR, which is regarded as one of the three biggest PEFs in the world along with Carlyle and Blackstone, has essentially benefited from its partnership with a Korean banking group.

After signing an MOU with Shinhan Financial Group in September 2018 for global alternative investments, it attracted 200 billion won from the nation's leading banking group for a fund which was raised for investments in KKR's various assets worldwide.


KB Financial Group Chairman Yoon Jong-kyoo, left, and Carlyle Asia Partners advisory team managing director John Kim / Korea Times file
KB Financial Group Chairman Yoon Jong-kyoo, left, and Carlyle Asia Partners advisory team managing director John Kim / Korea Times file

Carlyle, KB partnership follows after KKR, Shinhan ties

By Park Jae-hyuk

World-class private equity firms (PEFs) have begun forming stronger partnerships with banking groups here, showing an optimistic outlook for the domestic financial market's growth potential and stability, according to industry officials, Tuesday.

On June 18, the Carlyle Group announced it signed a memorandum of understanding (MOU) with KB Financial Group for a strategic alliance.

Through this alliance, they will draw on the respective strengths of their domestic and global networks to collaborate on new investment opportunities both in Korea and overseas.

While KB will work with Carlyle on the structuring and financing of the PEF's investments in Korea, Carlyle will use its Carlyle Asia Partners V buyout fund to invest 240 billion won ($200 million) in an exchangeable bond utilizing KB's treasury shares.

Among the 240 billion won it received from Carlyle, KB is expected to pay 210 billion won for the acquisition of Prudential Life Insurance Company of Korea.

"This strategic alliance will enable us to accelerate our global growth through close cooperation with Carlyle in discovering new investment opportunities, both in Korea and abroad," KB Financial Group Chairman Yoon Jong-kyoo said. "Equally, we believe that the strength of our domestic network will help Carlyle as it seeks to invest more into the Korean market."

Carlyle Asia Partners advisory team managing director John Kim said: "KB's leading position in Korea was a key factor in signing the MOU, as was the group's stable growth, strength of management, and deep credibility.

"The group has also demonstrated excellent risk management capabilities in the face of the economic downturn resulting from COVID-19. We look forward to starting this close partnership as we seek to build our presence in Korea."

This was the first deal Kim had signed since his appointment as the Carlyle Asia Partners advisory team managing director in October 2019.

When he moved to Carlyle from Goldman Sachs, the PEF vowed to continue to increase its investment in Korea, saying it saw compelling opportunities, driven by restructuring within the corporate sector, multinationals and chaebol looking to divest non-core businesses, and generational changes.

Analysts attributed the recent agreement to the undervaluation of Korean banks.

"The exchangeable bond was issued in favor of the issuer, so it means the global PEF values KB," Cape Investment & Securities analyst Kim Do-ha said. "The recent deal showed Korean banks have been severely undervalued."

Shinhan Financial Group Chairman Cho Yong-byoung, right, shakes hands with KKR Co-President Joseph Bae at the Shinhan Financial Group headquarters in Seoul, after signing a memorandum of understanding regarding a strategic partnership for global alternative investment on Sept. 21, 2018. / Courtesy of Shinhan Financial Group
Shinhan Financial Group Chairman Cho Yong-byoung, right, shakes hands with KKR Co-President Joseph Bae at the Shinhan Financial Group headquarters in Seoul, after signing a memorandum of understanding regarding a strategic partnership for global alternative investment on Sept. 21, 2018. / Courtesy of Shinhan Financial Group

KKR, which is regarded as one of the three biggest PEFs in the world along with Carlyle and Blackstone, has essentially benefited from its partnership with a Korean banking group.

After signing an MOU with Shinhan Financial Group in September 2018 for global alternative investments, it attracted 200 billion won from the nation's leading banking group for a fund which was raised for investments in KKR's various assets worldwide.


Park Jae-hyuk pjh@koreatimes.co.kr

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