The Blackstone Group will launch a unit in South Korea this month to buy companies and real estate assets for a combined US$2 billion from cash-strapped domestic firms, a report said on Monday, according to Reuters.
The Maeil Business Newspaper cited the finance and economy ministries and the National Pension Service (NPS) as saying that the private equity firm had finished the paperwork and was fine-tuning the timing of the launch, with an initial investment of US$6 million.
The report comes after the NPS said in October that it had signed a preliminary agreement with the New York-based private equity company to invest US$2 billion each in South Korea.
“Blackstone will look at healthy small-and medium-sized companies suffering temporary cash shortages,” an unnamed government official was quoted as saying.
Blackstone, one of the world’s largest private equity firms, had repeatedly said it saw great opportunities to buy assets as markets fell, despite the limited leverage available.
Foreign private equity firms have been cautious on South Korea since US investment Lone Star’s purchase of a stake in Korea Exchange Bank in 2003 fueled heated criticism about the huge profits foreigners could reap from distressed Korean firms.
But they are stepping up their hunt for bargains again as cash-strapped conglomerates look set to sell juicy assets.
Eased regulations and the weaker won are also encouraging their return to Asia’s fourth-largest economy.
Affinity Equity Partners was reportedly among the foreign private equity firms in the bidding for Doosan’s spirits-making division, which was sold to South Korean retail giant Lotte Group for 503 billion won (US$372.2 million) earlier this month.