Second-generation entrepreneurs sell "family business" to Carlyle: 3.6 billion!

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Inheritance tax exceeds 200 billion won, heirs choose to sell to Carlyle.

This article is 1,709 words, about 2.4 minutes reading time

Author | Wei Yajun

Source | PE Planet

(ID: PE-China)

Recently, according to Korean media reports, a decisive development has occurred regarding the sale of Korea’s leading water purifier company ChungHo Nais.

It is reported that the major shareholder family of ChungHo Nais is in deep negotiations with American private equity giant Carlyle Group, with the market generally estimating the company’s value at about 800 billion won (equivalent to over 3.66B RMB).

Sources say that both sides are engaged in intensive discussions on key terms such as transaction price, equity transfer method, and subsequent company operations, with final agreements pending further negotiations.

Currently, a preliminary consensus has been reached, including: after the transaction, ChungHo Nais will retain its core management team, and Carlyle will not interfere with daily operations, only providing support in strategic planning, R&D investment, and market expansion, focusing on driving digital transformation and product restructuring to enhance competitiveness in the global market.

At the same time, Carlyle promises not to lay off employees or close existing factories within the next three years, ensuring stable development. If all goes well, the equity transfer is expected to be completed in the second half of 2026.

Inheritance tax may exceed 200 billion won

Heirs choose to “sell”

Public information shows that ChungHo Nais was founded in May 1993 by founder Zheng Huidong in a modest office in Daechi-dong, Gangnam-gu, Seoul, under the name “ChungHo International” (later renamed ChungHo Nais).

Initially, ChungHo Nais focused solely on water purification technology, being Korea’s first company certified by the Water Quality Association (WQA) in the United States. After more than 30 years of development, its business has expanded from core water and air purification to hybrid products combining coffee-making functions, as well as cosmetics.

Over the past 30+ years, the company has successively launched differentiated products such as coffee machines combined with ice water purifiers, integrated wine cabinets with water purifiers, and expanded into the cosmetics field, with products sold to 66 countries and regions including the US, Europe, Southeast Asia, and Africa.

Zheng Huidong himself was known as a “tech CEO” and “home appliance craftsman” for his extreme pursuit of product design. It was not until last June that the 67-year-old founder Zheng Huidong passed away.

During his lifetime, Zheng Huidong held 75.1% of the company’s shares. According to Korea’s “Inheritance and Gift Tax Law,” the shares held by Zheng Huidong are subject to the “maximum shareholder share premium” rule, requiring an additional 20% control premium.

According to the Korea Economic Daily, the Korean National Tax Service launched a special tax investigation into ChungHo Nais in March 2026, and it is estimated that the inheritance tax faced by Zheng Huidong’s widow and son could reach 200-220 billion won. Under this context, selling control rights has become a practical option for the Zheng family to alleviate tax pressure and realize asset liquidity.

The valuation of 800 billion won is based on ChungHo Nais’s stable financial performance in recent years, consistent with the offer made by US water treatment company Culligan in 2022 to acquire ChungHo Nais.

According to the company’s 2024 audit report, ChungHo Nais achieved annual sales of 478.2 billion won (about 2.58 billion RMB), a year-on-year increase of 5.6%; operating profit reached 64.9-67 billion won, a surge of 44.4%-49.3% year-on-year, with operating profit margin rising from 9.9% in 2023 to 13.5%-14.2%, reaching the highest level since 2000.

Top-tier PE Carlyle

Over 20 years of investment in Korea

As of the end of 2025, Carlyle Group’s assets under management (AUM) totaled $474 billion, with approximately 34% (about $161 billion) in global private equity.

Carlyle has over $24 billion in cumulative equity investments in the consumer retail sector, participating in more than 135 deals. Its investments in Asian dining (including McDonald’s China, Japan’s Chimney restaurant chain, Dayou, etc.) demonstrate its strength in enhancing enterprise value through supply chain integration, digital marketing, and store network optimization.

As a global PE giant, Carlyle has been deeply involved in the Korean market for over 20 years, with a portfolio covering everything from coffee chains to fintech, security services, consumer, and mobility platforms.

Looking back, Carlyle’s Korea strategy dates to the early 2000s, characterized by a “controlling buyout + operational value enhancement” approach typical of private equity.

In 2013, Carlyle partnered with European private equity firm Triton to acquire Korea’s second-largest security services company, ADT Caps, for about 1.5 trillion won (around $13 billion).

After five years of operational improvements, Carlyle sold ADT Caps in 2018 for 2.8 trillion won (about $15k), achieving an ROI of over 80%. This case exemplifies Carlyle’s “buy-repair-sell” strategy in Korea.

In 2021, Carlyle’s Carlyle Asia Partners V fund acquired Korea’s second-largest coffee chain, A Twosome Place, with over 1,400 stores, for about $875 million (roughly 800-876 billion won), one of its largest investments in Korea’s consumer sector.

Most recently, in December 2025, Carlyle announced it would acquire 100% of KFC Korea from Orchestra Private Equity for about 200 billion won.

Carlyle plans to integrate A Twosome Place operations, leveraging its global experience in fast food and coffee to accelerate store expansion and menu innovation. After integration, A Twosome Place’s annual sales are expected to grow from about 520 billion won to over 800 billion won, an increase of more than 50%.

If Carlyle successfully acquires ChungHo Nais, Korea’s water purifier industry will enter a new phase dominated by foreign PE firms. Currently, industry leader Coway (Woongjin) is owned by US private equity firm Advent International and the Korean Kim Jung-hwan family conglomerate.

If ChungHo Nais joins Carlyle’s portfolio, it would mean Korea’s top two water purifier brands are both controlled by international private equity firms.

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