The Carlyle Group has been rising its presence in South Korea after sealing a string of funding and enterprise offers with prime Korean monetary providers corporations this 12 months. The US personal fairness agency is anticipated to additional broaden its footprint in Asia’s monetary sector underneath the management of Kewsong Lee who was appointed as its sole CEO in July.
For the reason that divestment of its wholly-owned ADT Korea, the nation’s No. 2 securities service agency, for a revenue of just about $1 billion in 2018, Carlyle had been barely seen within the nation’s M&A market – till it launched two credit score funds with Shinhan Monetary Group early this 12 months.
The revolving mortgage fund was the primary funding car collectively designed by a Korean asset supervisor and a world various funding agency tailored for Korean traders.
In June, Carlyle announced a strategic alliance with KB Financial Group to cooperate on new investment opportunities both in Korea and abroad. As part of the alliance, Carlyle agreed to buy $200 million worth of bonds convertible into KB Financial shares. It plans to acquire an additional 260 billion won ($219 million) worth of shares in the Korean banking group.
The KB deal marked its first funding in a South Korean financial institution in twenty years.
By way of Carlyle’s enterprise actions in Korea, monetary business sources draw a transparent line between the time Lee, of Korean origin, was put in as co-CEO in 2018, and after.
Lee’s community with South Korean businessmen helped Carlyle swiftly seize alternatives. Final 12 months, Carlyle hosted an investor discussion board in Seoul the place Lee held discussions with high-profile Korean enterprise leaders, together with Hyundai Motor Group Government Vice Chairman Chung Eui-sun.
“After Lee was appointed as the only CEO, the market has put rising worth on cooperation with Carlyle,” mentioned a non-public fairness business supply. “That will mirror confidence in Lee.”
FORAY INTO REINSURANCE
The announcement got here after Carlyle accomplished a $2.2 billion acquisition of Fortitude Group, which incorporates the US reinsurer Fortitude Re, from American Worldwide Group, in June. South Korean institutional traders have dedicated a considerable quantity of capital to a Carlyle fund that financed the acquisition.
Lee seeks to handle insurers’ capital put apart for greater than 30 years to cowl claims and to generate a revenue, a longer-term view than personal fairness corporations’ typical three-to-five 12 months investments.
He joined Carlyle in 2013 as deputy chief funding officer for company personal fairness and labored as head of the worldwide credit score section. Earlier than this, he labored at Warburg Pincus since 1992. Lee’s experience within the insurance coverage business provides weight to his affect at Carlyle.
Throughout his 21-year stint at Warburg Pincus, he led the funding in reinsurer Arch Capital Group when he was 36 and was a member of its board for 18 years. He was additionally concerned in Warburg Pincus’ acquisition of RenaissanceRe.
Carlyle, with $221 billion in belongings underneath administration, has $73 billion in dry powder. Within the first half, it deployed underneath $6 billion of recent capital to investments.
Lee favors giant investments over small offers, which means that Carlyle will aggressively chase buyout offers in Asia, which Lee mentioned was recovering from the coronavirus influence sooner than different areas.
In South Korea, Carlyle combined its operations, previously divided into buyout and growth capital units, in 2017. The growth capital unit, focusing on minority stake deals, has suffered from investment losses and delayed exits.
By Sang-eun Lucia Lee
<Edited by Yeonhee Kim>