Crossroads

At the intersection of technology, finance and the Pacific Rim.

Monday, June 08, 2009

KKR-KDB "Partnership"

This is old news from the Joong Ang Daily (comments are mine in parenthesis):

Korea Development Bank formed an investment partnership with Kohlberg Kravis Roberts yesterday, fanning expectation that the New York-based investment firm may join KDB to form a private equity fund to buy assets and subsidiaries from cash-strapped local companies.

The state-run bank has repeatedly said it hopes to team up with other institutional investors to form such a fund, aimed at buying assets from companies here to help them improve their cash conditions. (I may be a little cynical, but usually MOUs like this mean "Please bring me your deals to invest in, we will look at it, and then decide whether to invest or not")

Cho Hyun-ik, KDB’s vice governor, signed the memorandum of understanding for the partnership with Joseph Bae, managing partner at KKR Asia, at KDB headquarters in Yeouido, Seoul, yesterday.

"The partnership with KKR will help advance the local private equity fund market," said Cho.

Bae also said the U.S. company would be a "long-term investor" in the Korean market. KKR, which won a high-profile bid to take over OB Brewery earlier this month, has been expanding its presence in Asia since 2005. Bae declined to reveal how much KKR plans to invest here or in its partnership with KDB. (ok, everyone says they are a "long term" investor)

The development comes as KDB searches for investment partners for its so-called "corporate restructuring fund," aimed at helping cash-strapped corporate borrowers raise cash and improve their finances. According to KDB’s plan, the fund, to which KDB will pledge at least 100 billion won ($78,926,598), would buy non-core assets or subsidiaries from highly leveraged companies and sell them back to their former owners later when they get back on their feet, taking profit in the process.(very doubtful that that partner would be KKR; the conflicts in style would be quite large)

KDB has already taken preliminary steps, and is in talks with the cash-strapped Dongbu Group to buy its subsidiary Dongbu Metal.

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