Korea's NPS, KTCU likely to invest in CVC's ninth buyout fund

The two institutional investors may each commit to the $25 billion fund, focused on North America and Europe, sources say

(Courtesy of Getty Images)
(Courtesy of Getty Images)
Jun-Ho Cha 2
2023-02-20 21:42:17 chacha@hankyung.com
Private equity

South Korea’s key institutional investors are highly likely to invest via European private equity giant CVC Capital Partners’ ninth buyout fund, which targets $25 billion, investment banking sources said on Feb. 20.

National Pension Service (NPS), the world’s third-largest pension fund, and the Korean Teachers’ Credit Union (KTCU) are each positively considering commitment of an undisclosed amount, sources said. Sovereign wealth fund Korea Investment Corporation (KIC) has decided not to make a commitment, according to sources.

The Luxemburg-based PE firm is set to close the buyout fund, focused on North America and Europe, by June of this year.

The two Korean pension funds have both invested in CVC Capital’s previous vehicles. NPS, managing 920 trillion won in assets as of November 2022, invested $75 million in the €21.3 billion eighth buyout fund in 2020 after participating in the fourth, sixth and seventh buyout funds.

KTCU, which injected $100 million in the eighth buyout fund in 2020, is said to complete due diligence and confirm whether or not to participate in the ninth fund in the first half of this year.

Despite its global reputation, the European PE giant hasn’t been highly recognized in the Korean market. It acquired fast food chain KFC Korea for 100 billion won from local conglomerate Doosan Group in 2014 and sold it to KG Group for half its purchase price in three years.

It also bought hotel booking app operator GC Company, better known by its Korean name Yeogi Eotta, for 300 billion won in 2019. But that has not yet achieved the high investment performances compared with its global peers, such as the Carlyle Group, KKR & Co. and TPG Inc.

The PE firm has accelerated bidding for major deals in Korea after tapping Chris Rhee, a former partner of Affinity Equity Partners, as the head of its Seoul office in 2021. 

But it failed in deals including the acquisition of local education company Etoos, Burger King’s operations in Korea and Japan, electric battery maker SK On Co. and 3D dental scanner maker Medit Corp.

Industry watchers say the European PE will expand investment in Korea as it had a $3.5 billion first close for its sixth Asian fund, which has a hard cap of $6.5 billion, at the end of last year.

*Updated with commitment from NPS and KTCU

Write to Jun-Ho Cha at chacha@hankyung.com

Jihyun Kim edited this article.
#CVC Capital Partners #CVC Capital Korea #National Pension Service Korea #Korea KTCU #Korean pension fund #CVC Capital buyout #CVC Asia fund #CVC private equity #alternative investments

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