TPG picks son of ex-Samsung vice chairman to lead Korea investment

  • 2016-08-25

이상훈 TPG 한국 대표TPG named Sanghoon Lee, an ex-Morgan Stanley executive and elder son of a former Samsung Electronics vice chairman and CEO, as the head of its South Korean operations on August 23, as the U.S. private investment firm is striving to secure deals in the country where it had reaped huge profits from M&A transactions a decade ago.

Lee had served as managing director and head of Morgan Stanley PE’s Korean operations until recently since 2010. Previously, he had led Merrill Lynch’s M&A and capital market transactions in South Korea. He will join TPG as a partner to be responsible for sourcing and managing new private equity investments for TPG Capital Asia in South Korea, TPG said in a press release.

His father, Hak-soo Lee, had long served as a top secretary for Samsung Group Chairman Lee Kun-hee, and was regarded as Samsung’s No.2. He had headed the Samsung Electronics Chairman’s Office and served as chief of the Samsung Strategic Planning Office. Hak-soo Lee, who also had led Samsung Electronics as vice chairman and CEO, resigned in 2008, together with Chairman Lee who stepped down after prosecutors indicted him on tax evasion charges.

이학수“Sanghoon’s experience, local knowledge, and leadership make him an ­­ideal partner to help us capitalize on the opportunities that lie ahead,” Jon Winkelried, Co-CEO of TPG, was quoted as saying in the press release.

“We see Korea, in particular, as a country poised for growth with untapped opportunities across multiple industries,” Tim Dattels, Managing Partner of TPG Capital Asia, said in the press release.

The U.S.-based private investment firm had contacted bankers working for South Korean private equity firms and investment banks since early this year, hunting for its Korean operation head. TPG, better known for its former name, Newbridge Capital, in South Korea, has been hardly seen in South Korea’s M&A market, after it had earned more than 1 trillion won ($900 million) in profits from the sale of formerly Korea First Bank to Standard Chartered in 2005 and sold a broadband and fixed-line operator, formerly Hanaro Telecom, to SK Telecom in 2008.

A national backlash against foreign private equity houses’ bottom-fishing and huge, tax-free capital gains from domestic assets and the emergence of homegrown private equity firms in the early 2000s had led to the pullout of Lone Star and other foreign private investment firms from the country.

However, after its rivals KKR and Carlyle clinched deals worth billion dollars in South Korea, TPG hired a former Goldman Sachs’ Seoul-based banker, Seung-June Lee, as vice president in 2014. TPG has yet to close a deal in the country, after it lost to South Korea’s Lotte Group in the bidding for a car rental company last year.

“Even after the addition of Seung-June, TPG had difficulty in deal sourcing in South Korea,” an investment banking source told the Korea Economic Daily. “Now TPG has added a senior manager with deep experience in private equity investments as a representative (of Korean operations).”

The appointment of Sanghoon Lee added to a string of TPG’s new hires for key positions made in Asia this year, as it is aiming to expand its presence in the region.

The junior Lee studied in Korea University in Seoul and received a MBA from MIT Sloan School of Management. He had led Morgan Stanley PE’s investments in a Korean restaurant franchise, Nolbu, an advertising unit of Hyundai Motor, Innocean Worldwide and a railway vehicle maker, Hyundai Rotem. His younger brother, Sangho Lee, has been leading a local private equity firm, Glenwood PE, since 2014.

COMPETITION, HIGHER PRICE

Since TPG made its first investment in Asia in 1994, it has invested $8.1 billion in 69 investments across 12 countries in the region.

Industry observers are now paying close attention to TPG’s next moves in South Korea. But it remains uncertain whether TPG will be able to chase South Korean deals more aggressively than before, with the joining of the junior Lee.

It was known that a number of investment proposals made by South Korea-based managers of global investment firms had failed to pass strict criteria applied by their investment committees. Also, fierce competition between private equity firms has pushed sharply higher the price of South Korean companies’ management rights, leaving global investment firms on the sidelines.

Europe-based CVC Capital Partners had appointed Steve Lim, a former head of J.P.Morgan’s South Korean operations who is called as “the godfather of South Korea’s IB,” as its Korea head last year. But CVC has yet to pull off a deal in the country since then.

By Chang Jae Yoo

yoocool@hankyung.com

<Edited by Yeonhee Kim>