By Cynthia Koons and Kanga Kong
U.S. industrial conglomerate Tyco International Ltd. has
shortlisted a number of private-equity firms as potential buyers
for its South Korean security unit Caps Co., in what could be a
$1.4 billion acquisition, people familiar with the matter said.
Kohlberg Kravis Roberts & Co., Bain Capital, IMM PE and
Carlyle Group LP are in the running for the deal, the people said
this week.
Bain Capital has teamed up with South Korean private-equity firm
Hahn & Co. to make its bid, the people said, adding Standard
Chartered's private-equity arm and Affinity Equity Partners are
also among those still considering bids for the asset.
The private-equity interest in the Korean company comes at a
time when firms in Asia are sitting on some $120 billion of unspent
money and are eager to deploy that capital.
South Korea presents attractive opportunities for private-equity
buyers, given the maturity of the market and the prevalence of
large deals in which a buyer can take full control, such as this
one.
Tyco disseminated an information memorandum to private-equity
firms late last year in an effort to unload the asset in its
entirety. It isn't clear why Tyco wants to sell its Korean unit.
Morgan Stanley is handling the sale process. Tyco first bought what
was then a 68.5% stake in Caps in 1999 and delisted it from Korea's
Kosdaq market after acquiring the rest of the company later that
year.
The industrial conglomerate spun off its North American security
business last year to create ADT Corp. It also split off and then
merged its pipe-and-valve business with pump-filter manufacturer
Pentair Inc., leaving the rest of Tyco to focus on fire-suppression
systems for commercial buildings and safety equipment.
Last year, Tyco also agreed to acquire the
security-and-surveillance products firm Exacq Technologies for $150
million to expand its presence in the video-security market.
While Korea is an attractive market for private-equity buyers,
it hasn't been particularly friendly for foreign buyers in recent
years, after Dallas-based Lone Star Funds copped heat for the
successful exit of its investment in Korea Exchange Bank.
Lone Star, which first invested in KEB in 2003, only managed to
sell its 51% stake in the bank to Hana Financial Group in 2012
after repeated failed attempts over the years, a process wracked by
legal challenges and a drawn-out ruling on the sale by Korean
regulators.
Some critics in Korea said Lone Star made too much money from
its investment after buying the asset at a bargain price after the
Asian financial crisis. The protracted negotiations involved in
Lone Star's exit and the criticism that the deal attracted soured
sentiment for foreign private-equity firms operating in Korea.
Foreign private-equity firms have once again started looking at
buying Korean assets, however, in part because the Korean market
held up in the face of a selloff in emerging markets last summer.
Total private-equity investments, including minority stakes, rose
55% last year to $6.3 billion when compared with the year prior,
according to Dealogic data. That level is a record for the past
five years, and more than double the $2.5 billion that
private-equity firms invested in South Korea in 2008, for
example.
Write to Cynthia Koons at cynthia.koons@wsj.com and Kanga Kong
at kanga.kong@wsj.com
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