Carlyle set for $1.2b cash exit from Korea's ADT Caps

They will pay KRW1.28 trillion in equity for the asset and assume KRW1.7 trillion in debt. SK Telecom will contribute KRW702 billion for a 55% stake, with Macquarie Infrastructure & Real Assets putting in KRW574 billion for the remainder.

Carlyle bought the company four years ago from Tyco International for $1.93 billion. Tyco had acquired a majority stake in the business in 1999, then delisted it and took full ownership. The divestment came as part of an extensive global restructuring initiative.

A statement issued by SK Telecom argued that the valuation of 11x EBITDA is reasonable given previous deals involving global security services providers were completed at an estimated average of 11.7x EBITDA. The Korean company plans to upgrade ADT’s technology capabilities with the introduction of artificial intelligence (AI), internet of things (IoT), and big data solutions.

ADT is Korea’s second-largest security services provider with 570,000 clients. Its core offering is physical security services – for which it has an approximately 30% market share – including central monitoring services, with video surveillance and dispatch, access control, and facilities management. ADT generated KRW721.7 billion in revenue last year, up from KRW693.3 billion in 2016. Over the same period, it moved from a net loss of KRW91.8 billion to a net profit of KRW10.8 billion.

Carlyle claims to have driven top-line growth through new product introductions, cross-selling, and channel development. It also enhanced service quality through technological development, for example reducing the number of false alarm signals and improving driver routing efficiency for when staff were called out to inspect facilities. 

According to AVCJ Research, the ADT transaction – which is expected to close in the third quarter – represents the fourth-largest private equity exit in Korea by enterprise value. It comes eight months after Bain Capital Private Equity and Goldman Sachs agreed to sell their majority stake in cosmetics supplier Carver Korea to Unilever in a deal worth $2.7 billion.

Carlyle is in the process of raising its fifth Asia buyout fund, which reached a first close last October of more than $4.5 billion and has a hard cap of $6.5 billion. Other recent investment activity includes participation in a $1.9 billion spin-out of Chinese search engine Baidu’s financial services unit.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North Asia
• Trade sale
• Support services
• Buyouts
• South Korea
• The Carlyle Group
• Macquarie Group