KKR to buy $820 million of Samsung SDS convertible?bonds, shares jump 20%

* KKR to buy $820 mln of Samsung SDS convertible bonds, shares jump 20%

* KKR to act as long-term adviser to Samsung SDS on M&A, capital allocation

* Samsung SDS to boost AI, global expansion and M&A using KKR funds and cash reserves (Recasts story with analyst comment, share performance, background)

April 14 (Reuters) - KKR said on Tuesday it will buy $820 million of convertible bonds newly issued by IT solutions firm Samsung SDS, sending the South Korean company's shares up as much as 20.8%.

The investment firm said in a statement that funds managed by KKR and Samsung SDS, an affiliate of Samsung Electronics (SSNLF) , will collaborate closely on a range of value-creation initiatives.

It said KKR would provide an active advisory role to the management of Samsung SDS, including in the area of mergers and acquisitions, capital allocation and its expansion as a full-stack AI solutions provider.

Shares of Samsung SDS were up 19.4% in morning trade in Seoul, outperforming the benchmark KOSPI's 3.0% rise.

Analysts said the rally reflected expectations around KKR's partnership, with the investment seen as primarily aimed at building out KKR's artificial intelligence portfolio.

"KKR's investment would likely support Samsung SDS' overseas expansion or global M&A preparations, but it does not appear to have a strong focus on corporate governance improvements," said Ryu Young-ho, a senior analyst at NH Investment & Securities.

Samsung SDS said it plans to continue expanding investments in AI infrastructure and strengthening its AI transformation business competitiveness, backed by KKR funds and its existing cash and cash equivalents of 6.4 trillion won ($4.35 billion).

"We will actively pursue new growth drivers, including securing global business footholds, advancing into new businesses such as physical AI and stablecoins, and pursuing M&A," Samsung SDS said in a statement, noting KKR will serve as long-term adviser to the company for six year.

Foreign investor interest in South Korea has been growing in part due to the introduction of a range of market reforms under President Lee Jae Myung's administration to resolve the so-called Korea discount, which refers to the lower valuations that Korean companies typically trade at relative to global peers. The discount partly reflects the mostly opaque structures of family-owned conglomerates.

Last year, Swedish investment firm EQT said it would invest about $930 million in South Korea's Douzone Bizon to take up a 37.6% stake in the enterprise software provider, in what was one of its largest bets in Asia in 2025.

KKR and Samsung SDS expect the transaction to close in the second quarter. KKR said the investment will be made primarily from its Asia Fund IV. ($1 = 1,472.0000 won) (Reporting by Fabiola Ar?mburo in Mexico City and Heekyong Yang in Seoul; Editing by Subhranshu Sahu, Rashmi Aich and Ed Davies)