KT, NPS, Korea Post set up outbound M&A fund
Korean telecom giant KT Corporation has teamed up with the National Pension Fund (NPS) and Korea Post to form a KRW1 trillion ($883 billion) fund that will make acquisitions overseas. It is the latest of several initiatives launched by Korean corporations and institutional investors to drive outbound M&A.
According to the Korea Economic Daily, NPS and Korea Post have agreed to contribute KRW400 billion and KRW60 billion, respectively, to the KT Global Private Equity Investment Partnership. KB Investment and Rutter Associates are putting in KRW13 billion and KRW2 billion, and they are expected to manage the fund.
KT would likely match these collective contributions, taking the overall corpus to around KRW1 trillion. Minority stakes in telecom companies in the Middle East and Africa could be the initial M&A targets. KT wants to increase its overseas revenue to KRW4 trillion by 2015, up from just KRW700 billion in 2011. Last year it failed to pick up a stake in South Africa's Telkom due to government intervention.
KT is already a participant in NPS' Corporate Partnership Program - which also includes the likes of SK Group and GS Group - intended to bring together domestic corporations and private equity firms to pursue overseas M&A opportunities. This latest vehicle is described as an expansion of the fund established under the partnership program.
In addition to these "matching funds," NPS runs co-investment partnerships with GPs, including Standard Chartered Private Equity. This particular partnership was established in March 2011 and has now delivered four investments and deployed nearly 90% of the capital committed by the pension fund. Most recently, $46 million was injected into nutritional beverage brand Smoothies Korea to enable the acquisition of its US-based franchiser.
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