Private equity buyouts in South Korea reached their highest first quarter valuation in more than a decade, with US$3.47 billion spent across 12 transactions. This figure represents a 31% value increase compared to the same period in 2016 (US$2.65 billion, 13 transactions), and a strong recovery from a discouraging US$0.87 billion value in 2016’s third quarter.
Domestic deals continue to dominate the PE landscape (77% in 2016), with firms such as MBK Partners, Hahn & Company and IMM establishing themselves as front runners within the South Korean PE market. MBK has already conducted the highest-valued deal of the year so far, agreeing to purchase DaeSung Industrial Gases from its shareholders for US$1.7 billion.
Interest from international PE funds has also grown in recent years, with 13 buyout transactions totalling US$1.16 billion announced in 2016 marking the second highest annual deal count on record following 2104 (14).
The US was the most active cross-border bidder in 2016, having invested in a total of six deals worth US$477 million. The highest valued transaction was the US$325 million buyout of a 60.39% stake in South Korean cosmetics maker Carver Korea by a consortium led by Bain Capital and Goldman Sachs.
A 2016 White & Case report South Korea: Building for the future highlighted how South Korea’s digital infrastructure and skilled workforce has proved a draw for global investors. "Equity markets are very dynamic in South Korea,” the report observes. “South Korea is also an investment-friendly environment for private equity, and several global funds are investing here.”
As South Korea emerges as a viable PE market, deals are likely to accelerate in the coming year. Multiple deals in the pipeline, such as the upcoming sales of Sungshin Cement, EBest I&S and Dongbu Express, will provide ample opportunities for international and local funds alike to invest their cash.