| HONG KONG, March 5
HONG KONG, March 5 The volume of M&A activity in
South Korea has posted its strongest start to the year since
2008, rising 18 percent to date and dominated by a spate of
private equity dealmaking.
The $1.93 billion sale on Monday of Tyco's South Korean home
security business to Carlyle Group LP was the latest sign
that the pace of private equity buyouts that began picking up in
2012 is moving steadily ahead.
South Korea's M&A market historically has offered large
targets with narrow windows of opportunity as well as past cases
of anti-foreign takeover sentiment from regulators.
But activity is heating up again, helped by economic and
political stability, a steady domestic stock market and a stream
of buyout targets being churned out by foreign and local
"There's a longer term view emerging that in Korea, you can
do more traditional private equity buyouts," said Bob Partridge,
Ernst & Young's Hong Kong-based head of private equity
transactions for Asia-Pacific.
Private equity-backed M&A deals in South Korea rose 22
percent to a record $9.1 billion in 2013, according to data from
the Asian Venture Capital Journal, bucking an overall decline in
private equity volumes in Asia.
Many of those deals were led by a new crop of small to
medium-sized local private equity firms like Hahn & Co, as well
as more established buyout shops such as MBK Partners.
Carlyle's recent deal underscores the view that foreign
buyout firms are feeling more comfortable with South Korea after
years of trepidation. The country fell out of favour in the
mid-2000s following run-ins with unions, courts and regulators,
highlighted by Lone Star Funds' series of headline-grabbing
problems selling a stake in Korea Exchange Bank. 
In addition to private equity firms, corporate buyers are
circling South Korea. Among the deals attracting them are MBK's
sale of bottler Techpack Solution Co Ltd, which attracted
foreign strategic bidders, sources told Reuters, in a deal that
could fetch up to 600 billion won ($560.67 million).
Other targets include Hyundai Group's finance units, which
were put up for sale in December and Korea's largest bulk
shipper, Pan Ocean, previously STX Pan Ocean, which
is expected to go on sale this year.
People familiar with the matter said the final round of the
ADT auction involved a hectic scramble of foreign private equity
offers, something Seoul bankers have not seen for quite some
time. They included bids from Affinity Equity Partners and KKR &
Co, in addition to Carlyle.
The ADT buyout follows KKR and Affinity's mammoth $5.8
billion sale of Oriental Brewery to Anheuser Busch InBev SA
in January. That deal, Asia's biggest private equity
M&A exit, represents more than half of South Korea's $11 billion
volume for the first two months, Thomson Reuters data shows.
KKR and Affinity bought Oriental Brewery for $1.8 billion
from AB InBev in 2009, grew its market share to more than 60
percent from 41 percent when it was acquired, before selling it
back to AB InBev five years later for more than three times what
they had paid.