The Carlyle Group, the US private equity firm in which Abu Dhabi’s Mubadala Development Company owns a 7.5 percent stake, is among a number of bidders who have approached British retailer Tesco to buy its South Korean unit, people familiar with the matter told Reuters.
The three separate binding bids came from a consortium of Affinity Equity Partners and KKR & Co, Carlyle Group LP, and MBK Partners.
The bids have come in at around the 7 trillion won ($5.9 billion) mark, one of the people said, adding that Tesco is likely to pick a preferred bidder as early as this week. Tesco had set Monday as the deadline for final bids.
Homeplus, as Tesco’s South Korean unit is called, MBK Partners, KKR, Affinity and Carlyle declined to comment. The people declined to be identified as the sale process is private.
The deal is expected to move speedily, with another person having knowledge of the matter saying Tesco and advising bank HSBC could pick the preferred bidder by early September at the latest.
“This is a mission-critical deal for Tesco,” a third person with direct knowledge of the negotiations told Reuters, adding that the recent global market volatility stemming from China does not help matters as the won depreciates against the British pound and South Korea is seen tied to the Chinese market.
“The impetus is on them to get the deal done very quickly, with extremely high certainty.”
The won has dipped about 10 percent this year against the British pound.
Tesco, Britain’s biggest supermarket group, whose credit rating was cut to “junk” status by Moody’s and S&P in January, is battling to recover from an accounting scandal and reverse its market share losses in Britain to discount chains Aldi and Lidl. The sale of the South Korean unit is the biggest divestment Tesco is making to improve its financials.
An Aug. 24 report by Macquarie Research said Tesco’s disposal of its South Korean business could bring the British retailer back into investment grade territory two years ahead of the brokerage’s current estimates.
Carlyle Group was founded in 1987. Abu Dhabi wealth fund Mubadala bought its 7.5 percent stake the company in 2007.
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