KKR plans gradual exit from TSMC supplier LCY

KKR is preparing to gradually sell its investment in Taiwanese chemical manufacturer LCY Group, according to the company’s chairman, as the family-controlled business looks to accelerate growth in semiconductor materials, according to a report by Bloomberg.

LCY Group also wants to expand its international manufacturing footprint.

There report cite chairman, Bowei Lee, as saying that the private equity firm would exit its interests in LCY Chemical and a related affiliate over time. He did not disclose the identity of any potential buyer.

KKR acquired its position in 2019 through a $1.56bn investment, becoming LCY Chemical’s largest shareholder in the process. The firm reportedly declined to comment on the planned divestment.

Lee said KKR’s departure, alongside the retirement of former LCY Chemical chief executive Vincent Liu, would give the company greater scope to pursue a more aggressive expansion strategy. Liu stepped down from the CEO role in June and now serves as a consultant to the group.

The change in ownership comes as LCY seeks to expand production of specialty chemicals used by major technology companies, including Taiwan Semiconductor Manufacturing Co, and Intel.

LCY has been pursuing around $874m in loans, partly to fund capital expenditure, according to a person familiar with the matter.

The group is also planning to increase its investment in the US, where it announced a $280m Arizona project in 2021. The facility is expected to be completed around 2028, and KKR is also expected to exit that business.

Lee said the company’s future US investment could be significantly larger than previously planned, potentially involving facilities producing several different products. LCY is also in discussions with potential partners in Japan and South Korea.

In April, the company announced a Taiwan joint venture with Japanese chemical materials group JSR, adding to its presence in the semiconductor supply chain.

For KKR, the planned exit marks the potential realisation of its investment in a company benefiting from growing demand for materials used in advanced chip manufacturing. The deal also comes as semiconductor manufacturers continue to expand production capacity globally, increasing demand for specialised suppliers.