CLSA wins Korea outbound mandate

Indeed, since 2004, there have only been about 30 disclosed outbound deals by Korean companies in the auto and components space, with an average value of $14 million, according to S&P Capital IQ. By comparison, the Japanese have been far more acquisitive, announcing 127 investments over the same period, with an average deal size of $65 million.

The National Pension Service (NPS) initiated its Corporate Partnership Program to help redress this balance across multiple industries. The idea was that by pairing domestic corporates with private equity firms, the latter could help counterbalance the former's perceived deficiencies in cross-border M&A. Nexen is one of 12 companies understood to have signed up to the program and it is working with CLSA Capital Partners (CLSACP) plus local player Calix Investments.

The Nexen Global Fund has a corpus of KRW300 billion - the vast majority of which will be sourced from NPS - and is structured as a co-investment vehicle. Nexen is not an LP but will invest alongside the fund, which will exclusively target assets that are of interest to the corporate.

"CLSACP along with the co-GP Calix will work closely together with Nexen on sourcing, execution and integration of investment opportunities," says Richard Pyvis, chairman of CLSACP. The implication is that exits from the fund - which has a 10-year life and provides for management fees and carried interest - will come by way of trade sales to Nexen.

The pace of Korean outbound M&A increased after the global financial crisis, with approximately 100 investments in each of 2010, 2011 and 2012, and cumulative transaction value exceeding $14 billion in 2011 and 2012. Last year capital committed dropped to just over $6 billion across 83 deals.

Beyond energy and materials, which account for nearly half the $76.6 billion invested in the last 10 years, the pickings are slim towards the top end of the scale. The stand-out transaction remains NPS teaming up with Mirae Asset Private Equity and Korea Development Bank to support Fila Korea's acquisition of Acushnet - owner of the Titleist golf equipment brand - for $1.23 billion in 2011.

For CLSACP, the initiative represents an opportunity to expand product lines and meet the evolving needs of clients. "While CLSACP will continue to focus on our core business of managing co-mingled pools of capital, we see an opportunity to work together with large sovereign funds - particularly in Asia - to diversify their investment portfolio through strategic co-investments," Pyvis adds.

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• Topics
• Funds
• Buyout
• Fundraising
• North Asia
• CLSA Capital Partners
• Fundraising
• South Korea