Trio backs Korean chip spinout

Citigroup Venture Capital, CVC Asia Pacific and Francisco Partners have purchased a non-memory division of South Korea’s Hynix Semiconductor in a carve-out valued at $828m.

Citigroup Venture Capital, CVC Asia Pacific and Francisco Partners today announced a $828 million (€674 million) non-memory chip division buyout from South Korea’s Hynix Semiconductor, launching an independent business called MagnaChip Semiconductor.

MagnaChip has five wafer facilities in South Korea, employing 4,200 people. Customers include Haier, LG Electronics, LG Philips, NEC, Panasonic, Samsung and Sharp, according to a press release. The new company expects 2004 revenue of roughly $1 billion.

MagnaChip president and CEO Dr. Youm Huh will continue to lead the company. In a press release, he stressed the company’s many patents and research capabilities.

CVC Asia is a joint venture between Citigroup and CVC Capital Partners, the UK private equity firm. Francisco Partners, based in San Francisco, was launched in 2000 with a $1.8 billion fund for tech-sector buyouts, one of the largest debut funds ever raised. The firm encountered some early investment difficulties as the tech market weakened. But since 2002, the firm has completed some major transactions, including the $800 million buyout of General Electric’s business-to-business e-commerce division, the $220 million acquisition of semiconductor test and diagnostic equipment manufacturer NPTest from Schlumberger, and the $50 million recapitalisation of OfficeTiger, a business outsourcing company.

Francisco Partners has worked with Citigroup Venture Capital before, on the 2000 buyout of American Microsystems from Japan Energy Corporation.

Francisco Partners was founded by David Stanton, the former technology partner from Texas Pacific Group, and Sanford Robertson, the founder of Robertson, Stevens & Co., acquired by Bank of America.