A few months ago, US electronics maker Tyco put its ADT Korea unit up for auction. The bidding for Tyco Fire & Security Services Korea was fierce, with private equity investors and small Korean domestic funds combining with each other to muster enough capital to make a credible offer. Domestic banks were also happy to provide bidders with record amounts of debt. That is why, when Carlyle won, it paid almost $2bn for a company with an operating income of around $125m.
“Everyone went nuts when this deal came along,” one bidder recalls. It helped that the last major deal in Korea was KKR’s purchase of Oriental Brewery five years ago – on which the private equity group made more than five times its money. ADT was also the biggest deal in Korea since 2008.
A few days ago, KKR also bought a stake in Koreit, a Korean company that provides services for real estate developers, from a distressed seller. But, in contrast to the frenzy around ADT, this was a smaller deal that attracted far less attention and competition. And while Korean banks were happy to provide debt for ADT, they appear to have very little appetite for real estate these days.