Samsung SDS issues $820 mil. convertible bonds to KKR for future AI investment

Samsung SDS headquarters in Songpa District, Seoul / Courtesy of Samsung SDS

Samsung SDS will issue convertible bonds worth 1.22 trillion won ($820 million) to global investment firm KKR in order to finance the company’s future investments in artificial intelligence (AI) services.

According to Samsung SDS, it has approved the convertible bond issuance plan during a board meeting on Wednesday. At the same time, KKR announced that it has entered agreements to acquire the bonds, as the two sides seek to collaborate on “a range of value creation initiatives,” including AI transformation.

Convertible bonds are corporate bonds that can be converted into a predetermined number of common shares. KKR said the transaction is expected to close during the second quarter of this year.

Samsung SDS said it decided to form a strategic partnership with KKR as demand grows for building capabilities spanning from AI infrastructure to platform solutions, adding that securing global investment will help strengthen its foundation for growth.

KKR will also serve Samsung SDS in an active advisory capacity for six years in areas including M&A, capital allocation and supporting the company’s efforts to pursue strategic growth opportunities globally.

Backed by 1.22 trillion won in new funding secured through its partnership with KKR and 6.4 trillion won in existing cash and cash equivalents, Samsung SDS plans to significantly expand investments in AI infrastructure and strengthen its AX business competitiveness.

To enable sustainable growth, Samsung SDS said it will also secure global business footholds, as well as tapping into physical AI, stablecoin and other emerging businesses.

Samsung SDS is now expediting its domestic AI infrastructure business, including plans to complete the national AI computing center in Haenam, South Jeolla Province, in 2028 and an AI data center in Gumi, North Gyeongsang Province, in 2029.

The company is also pursuing data center design, build and operate (DBO) businesses and stepping up efforts to strengthen its competitiveness in the domestic AI infrastructure market.

Leveraging its expertise in providing IT services for manufacturing, finance and the public sectors, Samsung SDS is also reinforcing its position as a leading provider of end-to-end AI transformation services.

It is also expanding relationships with top players in the global AI industry, becoming the first Korean firm to sign a partnership with OpenAI late last year.

“We are delighted to welcome KKR as a strategic investor as we continue to advance our growth strategy,” Samsung SDS CEO Lee Jun-hee said. “Through this strategic collaboration, we will actively explore a wide range of growth opportunities, including M&A, by leveraging KKR’s expertise accumulated in global capital markets.”

“This unique strategic partnership brings together Samsung SDS, part of one of Korea’s most established conglomerates, with KKR’s global experience in long-term value creation,” KKR Head of Korea Park Chung-ho said. “Against a backdrop of increasing demand for digital transformation and AI solutions, we have strong conviction in Samsung SDS’ market leadership and growth potential by playing a critical role in advancing Korea’s digital capabilities and infrastructure.”