How KKR Wrote a ₩1.22T Check to Samsung SDS, A 6-Year Lockup with No Refixing and No Put

Korea's IT services industry entered 2026 with four simultaneous capital races: generative AI, industrial AI, MLOps, data centers. Samsung SDS, LG CNS, SK C&C, Lotte Innovate, and Posco DX, the chaebol IT subsidiaries, are all scrambling to secure R&D plus M&A funding for the AI transition. Globally, Accenture, IBM, Cognizant, and Capgemini are running the same transition on their own balance sheets. What distinguishes Korea's chaebol IT subsidiaries is group governance protection, new share issuances dilute parent shareholdings, so structured instruments (CBs, EBs, hybrid capital) are increasingly preferred over straight equity.

It is extremely rare in Korean PE history for a foreign asset manager to take a direct position in the capital structure of a chaebol IT subsidiary. These subsidiaries typically rely on intra-group cash pooling or domestic-institutional hybrid securities. This deal marks the first time a foreign mega-PE firm has declared, "in six years we intend to be a potential 8% shareholder of a Korean chaebol IT company."

Samsung SDS was founded in May 1985 as Korea's first systems integration company, spun out of Samsung Electronics' internal IT department. Listed on the KOSPI in November 2014. Three core business lines: ① SI/ITO, enterprise IT build and operations, ② SCL, supply chain logistics, global freight, ③ Cloud / AI, Samsung Cloud Platform, Brity AI. The company runs Samsung Group's global IT operations as the anchor customer while gradually reducing intragroup dependency and expanding external revenue. As of 2025, ~25,000 employees across 30+ entities in 14 countries.

This deal is structured around four negatives: no new shares, no treasury share sale, no asset divestiture, no acquisition financing. Samsung SDS issued ₩1.22T of unregistered, unsecured private convertible bonds in a single tranche, sold entirely to KKR. KKR holds the bonds until either (a) conversion between Apr 30, 2027 and Apr 23, 2032 or (b) maturity redemption on Apr 30, 2032. Both the bonds themselves and the shares issued upon conversion are locked up for 6 years. KKR funded the purchase entirely from Asia Fund V (PE arm) equity, no acquisition financing was used.

Because this was a single-tranche private CB purchase rather than a typical M&A transaction, the advisor lineup differs from standard precedents. Each side's in-house capital markets teams led negotiations, with each side using its preferred Korean law firm. Public disclosure of advisor mandates is limited.

Note: Advisor information is based on public reports and market observation; some assignments are unconfirmed.

Unit: KRW 100M | K-IFRS consolidated | Source: Samsung SDS annual reports (FY2025 preliminary and estimated)

The key valuation variables here are the 180,000 KRW conversion price and the +18% conversion premium vs. the prior close (~153,000 KRW at the board resolution date). The instrument is a six-year option for KKR. If Samsung SDS shares clear 180,000 KRW any time before Apr 23, 2032, KKR can convert into ~8.06% of the company at an immediate gain. If they never clear that level, KKR collects 2.5% coupon plus yield-to-maturity in bond form. This asymmetric payoff is why the market describes the structure as heads I win, tails I don't lose.

Note: Price figures are based on public filings and press reports; some point-in-time prices are estimated.

The transaction closed on Apr 30, 2026. The six-year lockup means there is no short-term variability, and the true assessment of this deal lands at the Apr 30, 2027 conversion eligibility date and the Apr 30, 2032 maturity. The initial market reaction has settled into the consensus view that this is "highly issuer-favorable for Samsung SDS, with KKR pricing long-term partnership value over yield." As the first direct foreign mega-PE position in a Samsung Group company's capital structure, the deal has prompted speculation about similar transactions at LG CNS, SK C&C, and other chaebol IT subsidiaries.