LCY Group is approaching a major shift in ownership and strategy, with private equity giant KKR planning to gradually sell down its stake in LCY Chemical. That would bring the company’s KKR-backed era closer to an end after years under private ownership.
In a recent interview, LCY Chemical chairman Lee Mou-wei said that, with KKR stepping back and former CEO Liu Wen-long having left, the century-old family business will move away from its earlier, relatively conservative style and return to family-led control. He said the company plans a more aggressive global expansion drive centered on semiconductor materials.
Privatization chapter nears its end
In 2018, LCY Chemical agreed to a privatization deal funded by KKR at about NT$47.8 billion, or roughly $1.56 billion. The company said at the time that the move would help speed up organizational restructuring, bring in international resources, and ease the pressure of short-term reporting demands tied to public markets.
LCY Chemical was formally delisted from the Taiwan Stock Exchange on Jan. 30, 2019. Its former ticker was 1704. Rongke, its core subsidiary focused on electrolytic copper foil and listed under ticker 4989, remained publicly traded.
The market had expected LCY Chemical to relist about five years after going private. That has not happened. According to Lee, a longer-than-expected adjustment period tied to overseas plant construction and internal strategic friction has kept the company in its privatized state.
Lee said KKR and the previous management team had taken a relatively conservative operating approach. As KKR moves toward an exit, LCY Chemical is seeking an $874 million loan to meet capital expenditure needs and is holding deep investment talks with strategic partners in Japan and South Korea as it prepares for a post-KKR reshuffle in ownership and a broader global push.
North America plans target advanced semiconductor processes
LCY Chemical supplies specialty materials to Taiwan Semiconductor Manufacturing Co. (TSMC) and Intel, and Lee said the company’s next phase of expansion will focus squarely on advanced semiconductor manufacturing.
Referring to TSMC’s announced $265 billion expansion plan in the United States, Lee said LCY Chemical’s pace “will be faster than TSMC.”
The company already has a presence in the U.S. through a factory in Texas and an R&D base in California. It had previously planned to invest $280 million in a new electronic-grade specialty chemicals plant in Arizona, scheduled for completion in 2028. The facility is meant to produce electronic-grade isopropyl alcohol, or EIPA, used in advanced process cleaning.
Lee said the project’s future scale will exceed the original plan. He added that LCY Chemical’s North American investment will be “much larger,” and that the Arizona site will eventually cover multiple semiconductor specialty product lines in line with a local production and local supply strategy shaped by geopolitics.
Family office avoids private credit and data centers
Lee also used the interview to disclose the investment approach of his Singapore-based family office. The office is run jointly by Lee and his eldest son, Hendrick Lee, founder of Palm Drive Capital. He said as much as 99% of its assets are allocated to private equity and venture capital.
Lee said the family office has chosen to stay away from two areas: private credit and data centers.
- Private credit: Lee said the internal team reached that decision after intense debate. He added that many experienced investor friends who rushed into the segment are now disappointed.
- Data centers: LCY had exposure to the sector as early as 10 years ago, but Lee said he now sees risk in the segment as exceeding return.
“My required annualized return is 20% to 30%,” Lee said. “That is not easy, so we have to be extremely selective when choosing targets.”
Lee links the next phase to a 30- to 40-year reset cycle
LCY Group was founded in 1915 by Lee Mou-wei’s grandfather as a timber business. The company later developed into a petrochemical group and has now become a semiconductor materials player.
Lee said long-established companies need a thorough reinvention every 30 to 40 years to stay alive. With KKR fading out and the global semiconductor supply chain still being reshaped, LCY Chemical is entering its next phase under renewed family leadership.