Carlyle invests $198m in Korea's KB Financial

Acting through Carlyle Asia Partners V, which closed at $6.55 billion in 2018, the private equity firm has subscribed to a convertible bond with a five-year tenor and a conversion price of KRW48,000 per share, according to a filing. KB Financial’s stock closed at KRW35,250 on June 18. It touched KRW48,300 on January 20 but sunk as low as KRW26,050 over the ensuing two months.

Most of the proceeds will be used to support KB Financial’s KRW2.27 trillion acquisition of the Korean unit of US-based Prudential Financial, which was agreed in April. The company, once combined with KB Life Insurance, is expected to become the fifth-largest domestic life insurer by assets. It will also help KB Financial compete more effectively with Shinhan Financial Group, which bought Orange Life Insurance – formerly ING Life – from MBK Partners in 2018.

KB Financial is a diversified financial services conglomerate perhaps best known as the owner of Kookmin Bank, Korea’s largest commercial lender. This is one of 12 subsidiaries covering brokerage services, credit cards, asset management, insurance, lending, real estate investment, IT, and credit checking. The company also owns KB Investment, a local private equity fund manager.

As of December 2019, KB Financial had KRW518.5 trillion in assets. Interest income for the year was KRW14.6 trillion, up from KRW13.7 trillion in 2018, while over the same period, net profit rose from KRW3 trillion to KRW3.3 trillion.

“This strategic alliance will enable KB Financial to accelerate its global growth through close cooperation with Carlyle in discovering new investment opportunities, both in Korea and abroad. Equally, we believe that the strength of our domestic network will help Carlyle as it seeks to invest more into the Korean market,” Jong-gyu Yoon, chairman of KB Financial, in a statement.

Last year, the private equity firm appointed John Kim, previously of Goldman Sachs, as a managing director in its Asia buyout team and head of all investment activity in Korea. Carlyle has deployed more than $1.5 billion of equity in Korea over the past two decades, but this is its first new investment since 2014. That asset – security business ADT Caps – was sold two years ago for an enterprise valuation of KRW2.97 trillion.

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• Topics
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