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KKR offloads 50% stake in Oriental

Less than two months after acquiring Oriental Brewery in a blockbuster deal, KKR is selling half the brewer to Affinity Equity Partners for $400m.

Kohlberg Kravis Roberts, which agreed to acquire South Korea’s Oriental Brewery from Anheuser-Busch InBev for a consideration of $1.8 billion this May, is offloading half of the company’s equity to Asian buyout firm Affinity Equity Partners.

Affinity will acquire a 50 percent stake in Oriental for $400 million, a source confirmed.

Besides investing $400 million for an equity stake, Affinity will also take on half of the debt and vendor financing, according to a report in the Financial Times. KKR had obtained $300 million in vendor financing from Anheuser-Busch InBev and $750 million in bank financing from global banks HSBC, JPMorgan, Nomura and Standard Chartered, the report noted.

This is a way to de-risk a transaction and KKR was looking out for a partner to syndicate the equity.

Market source

“The expectation was there will be some syndication. An $800 million equity cheque is a huge cheque in any environment, more so at a time like this. This is a way to de-risk a transaction and KKR was looking out for a partner to syndicate the equity.”

Affinity was a natural partner for KKR, continued the source, given it had initially been involved in the auction process for the brewery and it also gives KKR a partner with Korean investment experience.

A couple of Affinity's most successful exists have been recorded in Korea – the sale of electronics retailer Himart fetched it 10 times its original investment, while its exit from auto parts-maker Mando earned the firm five times its original investment.

The sale of Oriental Brewery was part of In-Bev’s de-leveraging programme. The company had taken a $7 billion bridge loan when it acquired US-based Anheuser-Busch for $52 billion in November 2008.

Affinity is an Asia-focused buyout firm with assets under management in excess of $4 billion. The firm has offices in Hong Kong, Seoul, Singapore and Sydney.

KKR declined to comment. Affinity was unavailable for comment at press time.