[THE INVESTOR] HONG KONG -- Bain Capital co-Chairman Stephen Pagliuca on Nov. 15 hinted that the US private equity giant will make a bigger push in the Korean market after a series of successful mega deals in recent years.
“We are very excited about the Korean market and what we have done there. That’s a payoff of some great investments,” he told The Investor on the sidelines of the 2017 AVCJ Private Equity and Venture Forum in Hong Kong.
“I’m hoping to become bigger in Korea. The country has a very dynamic market with smart people. I think there are a lot of opportunities.”
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He picked a team of five people specialized in Korea as the key driving factor behind Bain’s stunning investment performance recently.
Until 2015, Bain, despite its global brand name and strong footing in Japan, had little presence in Korea. With Lee Jeong-woo, a former Morgan Stanley executive, joining the Korean team in late 2015, the firm’s business started thriving.
Bain, along with Goldman Sachs, purchased a 60.39 percent stake in Carver Korea, a local cosmetics retailer, for 430 billion won (US$390 million) in August last year and sold off the stake to UK’s Unilever for about 1.9 billion won in one year -- a return of almost fivefold its initial investment.
In April this year, Bain also acquired a 40 percent stake in local botulinum toxin maker Hugel for US$816 million, with the firm’s imminent entry into US and European markets.
More recently, the firm led a multinational consortium, including chipmaker SK hynix and tech giant Apple, to acquire Toshiba’s NAND chip business unit for a whopping US$18 billion.
Industry watchers say Bain, like other big foreign private equity firms, will further expand its presence in Korea where lucrative assets owned by big conglomerates are expected to be put up for sale amid the government’s heightened scrutiny against their excessive expansion.
Bain is currently being cited as a key bidder for pending big deals such as ADT Caps, the nation’s second-largest security firm owned by The Carlyle Group, and CJ Healthcare, the nation’s 10th-largest drug maker owned by food and entertainment giant CJ Group.
Sources say Carlyle hopes to sell ADT Caps for about 3 trillion won, which compares to its purchasing price of 2.6 trillion won from US-headquartered security firm Tyco International back in 2014.
Amid high valuation concerns, some other financial investors such as CVC Capital Partners and Affinity Equity Partners are reported to have created an advisory team for due diligence.
“We are excited about the opportunity,” the Bain chairman said of ADT Caps without further elaborating. Asked about overall valuation issues of Korean firms, he declined to comment saying, “We look at every situation individually. We try to look at companies we think we can differentiate and grow and help their exports.”
Bain is one of the leading global PEFs with about US$75 billion in assets under management. Pagliuca, who joined the firm in 1989, serves as the global head of Bain Capital Private Equity’s technology, media and telecom and financial services business.
By Lee Ji-yoon (firstname.lastname@example.org)