Who’s who in Korean private-equity world

 This is the first in a series of articles looking into Korea’s private equity market and its key players. -- Ed.

When the National Pension Service announced last month its choice of fund managers to run large-cap equity investments, the market saw the return of the VOGO Fund, Korea’s oldest private equity house.

Renamed VIG Partners, the firm was chosen as one of two firms to each invest a total of 250 billion won ($216 million) in domestic companies, winning a competition that is often likened to a national beauty pageant of private equity firms. 
It marked a dramatic comeback for VIG, which in 2014 became the country’s first private equity firm to default on a buyout deal.

For Korean private equity as a whole, it highlighted the push by a thickening group of mid-tier players to challenge the market’s established frontrunners, namely MBK Partners, Hahn & Company and IMM Group. 

“Since Korea’s PEF industry is only 10 years old, many general partners (private equity firms) have not yet established a track record to prove their worth,” said Lee Hyeong-gyu, a senior attorney and partner at law firm Jipyong, who coauthored a book on the Korean private-equity fund industry.

“Some firms stand out among the pack, like MBK Partners, but the industry is just beginning to figure out who’s good at what.”

The leaders

Among Korea’s nearly 400 registered private equity funds, it is a no-brainer that MBK is the leader.

The firm, named after its founder and chairman Michael Byung-ju Kim, is by far the largest and most successful independent private-equity house, managing over $10 billion in three flagship funds.

“MBK is like the king of Korean private-equity firms. From fund-raising, deal sourcing, execution and exits, the firm overwhelms other homegrown buyout firms,” an industry insider told The Korea Herald.

MBK’s acquisition last year of Homeplus supermarket chain from U.K.’s Tesco, priced at $6.1 billion, is to this date Korea’s biggest private-equity deal.

The firm’s reputation, however, was dented recently when its shell firm, established for the acquisition of Korean cable-TV operator C&M, narrowly averted a default on loans it took out for the takeover deal.

In fact, C&M is likely to become a major stain on MBK‘s investment track record, as its value is believed to have fallen sharply since the acquisition by the MBK-led consortium due to a grim market outlook.

The MBK’s first fund, which executed the investment, has made solid proceeds in its other portfolio investments, enough to cover the C&M losses.

Hahn & Company, led by founder and CEO Hahn Sang-won, aka Scott Hahn, started relatively late in 2010, but is now the second-largest independent private-equity house in Korea, managing over $3 billion.

Running two funds, it has invested in 12 companies so far, including Halla Visteon Climate Control, now renamed Hanon Systems.

Hahn & Company, together with Hankook Tire, bought a controlling stake in Halla Visteon for $3.6 billion in 2015, which was at that time the country’s largest private equity-led buyout. The record was broken by MBK’s Homeplus deal later that year.

Next up in the group of leaders is IMM Private Equity, which manages $2.7 billion.

Led by Song In-jun, the firm made splashes in the local market, with the launch of a 1.4 trillion won blind fund, its third and largest so far.

The new fund is a milestone of IMM, as it pooled over 1 trillion won from domestic pension funds and major institutional investors. 

Emerging players


Putting its checkered past behind it, VOGO Fund, Korea’s first private-equity firm, earlier this year split into two units VIG Partners and VOGO Investment. VIG Partners appears to be on a roll since then, with a successful exit from Burger King Korea in February, and more recently, the successful bid for the 250 billion-won NPS mandate.

The firm sold the fast-food chain for 210 billion won, more than double the price --100 billion won -- it paid for it back in 2012. VIG is now trying to launch its fourth blind fund, with a target of 600 billion won.

As for the NPS recognition, VIG shares the spotlight with SkyLake Investment. SkyLake was the other of the two private equity houses chosen for large-cap investments.

Led by former Information and Communication Minister and Samsung Electronics CEO Chin Dae-je, the firm has built a strong reputation for investments in IT firms.

SkyLake hopes to raise 250 billion more, on top of the NPS money, to launch a 500 billion-won fund.

When it comes to tech investments, STIC Investments, led by Do Yong-hwan, is a force to be reckoned with. The firm has its roots in the venture capital world. It claims to have $4.2 billion in global assets under management, with physical presence in China, Taiwan and Vietnam. 

By Lee Sun-young  (milaya@heraldcorp.com)