Hahn & Company closes first fund

There are believed to be two anchor investors in the fund - Temasek Holdings and Asia Alternatives - and about 30 LPs in total. Most of them are foreign and they include well known institutions from Asia and the US. The firm employs around a dozen professionals, many former colleagues of Hahn from MSPE.

"There is a lot more deal flow in Korea than it might appear," Hahn tells AVCJ. "It is a localized market and transactions are harder to get to. It is all about establishing trust and having a good reputation in the market. Our deals tend to be independently sourced."

The fund's investment focus will be much like that employed by Hahn at MSPE. He joined the company in 1994 and opened its Seoul office in 2000, pursuing a combination of buyouts and control transactions. Notable investments included Ssangyong Corporation, a trading company that was sold to GS Group in 2009, and Landmark Investment Trust Company, which was sold to ING in 2007. MSPE has yet to exit two other deals Hahn secured: Hyundai Rotem, a joint venture of the Hyundai Motor Group, and Jeonju Paper, a manufacturer of newsprint and specialized paper products.

Hahn notes that the principal targets are no longer the distressed sellers that dominated the fallout from the Asian financial crisis, but privately owned family businesses. The principal sectors of interest remain manufacturing, technology and financial services, with investors looking to capitalize on consolidation in Korean industries.

The fund's first investment fits most of these criteria. Hahn & Co. is in the process of acquiring approximately 50% of Cowell e-holdings, a KOSDAQ-listed supplier of mobile devices and optical parts. The transaction is worth more than $80 million and Hahn has known the company chairman for 10 years.

What is unusual is that Hahn & Co. plans to take the company private. This kind of deal is difficult to complete in Korea. Hahn estimates there have only ever been 30 or so tender offers for listed companies and most of these were transactions in which existing shareholders with large majority stakes bought whatever they didn't already own. The main barriers are regulatory. For example, investors are required to have all the money in place - in cash - when making the tender offer.

"My understanding is this [the Cowell deal] is the first take private by any private equity firm in Korea," Hahn says.

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• Topics
• North Asia
• Fundraising
• Buyouts
• Scott Sang-won Hahn
• Morgan Stanley Private Equity Asia