Oaktree Open To South Korea Deals

SEOUL (Reuters) – Oaktree Capital Management is open to partnerships for possible deals in South Korea, even large ones, although it has not yet made any investments, said the Asia-Pacific head of U.S. private equity fund on Thursday.

“I have three in my briefcase now, they were given to me last night…. I’ll be following up on them,” Ralph Parks, chairman of Oaktree Capital Hong Kong, told Reuters in response to a question about potential Korean investment targets.

The U.S. firm expects investment opportunities for distressed debt to remain “for years to come”, in particular in the United States, and expects valuations in Asian assets to stay attractive despite the recent stock market run.

Parks was speaking on the sidelines of the Asian Venture Capital Journal (AVCJ) conference in Seoul.

Oaktree signed a preliminary deal last year to invest $3 billion in South Korea and explore joint investment opportunities with the country’s National Pension Service, but so far has not made any deals, Parks confirmed.

Still, the $60 billion fund is strongly committed to investing in South Korea, preferably with local partners. The recent $1.8 billion acquisition of No. 2 beer maker Oriental Brewery by Kohlberg Kravis Roberts & Co KKR.UL is an added incentive, said the former CEO of JPMorgan Asia Pacific.

“We would not on our own seek to do an ‘Oriental Brewery’, that’s too big … but we could, certainly, in partnership with someone. And seeing that such a deal has gotten done actually increases our appetite to form such a partnership and to go after larger deals.”

Oaktree ranks among the world’s biggest alternative asset managers and over the years has compiled an enviable investment record. The firm has long specialized in investing in distressed securities as well as high-yield and convertible debt markets, private equity and real estate.

Private equity giant Blackstone (BX.N) also signed a memorandum of understanding with South Korea’s National Pension Service late last year to invest $2 billion each in South Korea. But it has not yet executed any deal in Asia’s fourth-largest economy.

Private equity investments in Korea have been overshadowed by the tribulations of Lone Star LS.UL, which has been struggling to exit its $1.2 billion investment in a Korea Exchange Bank (004940.KS) stake since 2006.

“It’s very interesting to see that the volume of private equity deals… announced and closed in Korea has picked up pretty significantly just during the last six months or so,” said Parks.

“This is a significant departure from the experience of the last 2 or 3 or 4 years… That’s a good thing.

Now, Parks said, one would need to watch how those investors will be treated. “Will they be encouraged and supported, or will barriers be suddenly thrown up against them and the companies they invest in, of all kinds and in very special local ways ?… We don’t know.”

(Reporting by Marie-France Han and Kim Yeon-hee; Editing by Valerie Lee)