The unknown fate of Byeon Yang Ho, a founder and managing director of Seoul-based Vogo, unsurprisingly, has affected the private equity firm's investment and fundraising activities.
Byeon has been detained on allegations that he accepted bribes from Hyundai Motor in his former capacity as a director at Korea's Ministry of Finance. The ongoing trial is expected to come to a conclusion in October.
In deciding the case, the court could change the course of Vogo's future: a conviction resulting in Byeon's resignation may trigger the key man clause in Vogo's limited partnership agreement. However, Vogo's two other co-founders, Jae Woo Lee and Jason Shin, remain active in sourcing and executing deals and are confident that Vogo will continue successfully regardless of the court's decision.
Despite Byeon's troubles, Vogo's deal making activity has remained active. The firm has completed two tranches of a three-part $190 million investment in Tong Yang Life, a local insurance company. According to Jason Shin, a co-founder of the firm, $70 million in debt funding for the deal has been secured, including $40 million for the final tranche. ?Given that this is an unlisted stock, it is significant that we have obtained acquisition financing from five largest banks in Korea.?
However, a potential high-profile investment in BC Card, which has a large credit card network in Korea, is pending the outcome of the trial. Vogo had planned to acquire a stake of more than 50 percent in the business after signing a memorandum of understanding with Woori Bank, Chohung Bank and Hana Bank, three large shareholders of BC Card, to acquire their shares.
Jae Woo Lee said in an interview: ?We negotiated this deal with the company and hope to extend the validity of the MOU signed with BC Card. This was not an auctioned deal.?
Shin said: ?We are currently more focused on proprietary deals rather than high profile auctions, especially due to Dr Byeon's current legal problems.?
On the fundraising side, an ongoing effort to round up $1 billion for the firm's debut fund has been suspended at $650 million in commitments received. Lee said potential new investors were disinclined to make any decision before hearing the outcome of Byeon's trial.
Lee said: ?What lies ahead is a moving target in terms of the trial outcome. However, our team is still the leading private equity team in Korea in terms of executing and sourcing deals, as demonstrated by the Tong Yang Life deal and a number of exclusive deals we are currently looking at.
Merrill boosts Asian sponsors team
Ajay Swahney, former head of leveraged finance and financial sponsor coverage at ING, will lead Merrill Lynch's Asia leveraged finance origination team in Hong Kong. Reporting to Sheldon Trainor, head of Asia origination at Merrill, Swahney will focus on the origination and execution of leveraged transactions for acquisition finance and LBOs.
He will also work with Merrill's global leveraged finance group to manage deal structuring and pricing, leverage lending commitment, syndication and risk management.
At ING where he spent 12 years, Swahney was responsible for financings in the telecom and media sectors. Before that, he was with Citigroup for more than four years.
In July, Jeff Edwards, Merrill's chief financial officer, said the bank was aggressively hiring to build out its global leveraged finance group.
Henderson hires in Asia
Henderson Private Capital has added Carol Lee and Sigit Prasetya as senior principals to its Asian team. Lee and Prasetya will be responsible for sourcing, executing and managing investments. Lee will focus on Korea from Hong Kong, and Prasetya will cover Southeast Asia from Singapore.
Lee brings hands-on knowledge of due diligence, negotiation, management and divestment of investments from 12 years of experience in private equity and investment banking with Merrill Lynch and JP Morgan.
Prasetya comes with 13 years of experience in investment banking, private equity and management consulting. He was previously at Morgan Stanley where he was head of investment banking in Indonesia.
The new hires follow the appointment of Ming Shu as a principal for North Asia in March. They are aimed at building deal origination and execution capabilities and on-the-ground presence, said Roger Greville, managing director of Henderson Private Capital. The firm is currently raising a $400 million fund.
The firm recently lost Scott Greck to Archer Capital, a private equity firm in Australia. Greck had been made partner in September last year, around the same time that Sanjiv Kapur, then head of Asia, left the firm. Lucian Wu, a former partner focusing on North Asia, has also left.
KKR hires senior advisor for Japan
Kohlberg Kravis Roberts has hired Hisashi Hosokawa, a retired bureaucrat who served with Japan's Ministry of International Trade and Industry (MITI), to be a senior advisor for the buyout firm in Tokyo.
Hosokawa joined MITI in 1964 and was appointed a minister for International Economic Affairs in 1996. Japan's influential MITI was reorganised as the Ministry of Economy, Trade and Industry in 2001. Hosokawa has also been a non-executive advisor to the Long Term Credit Bank of Japan (now Shinsei Bank), and has served on the boards or as an advisor to several Asian companies.
KKR is betting that Hosokawa's knowledge of Japanese business and regulatory bodies will strengthen its position in the market.
JP Morgan boosts Asian leveraged capabilities
JP Morgan will be moving three bankers from its New York headquarters to Hong Kong to add to the bank's leveraged finance capabilities in the region.
Tim Donahue, a managing director of the investment bank's high yield capital markets division in New York, will start in Hong Kong effective September, a spokeswoman of JP Morgan said. He will run the bank's Asian leveraged finance group along with Eric Mason.