Korean buyout fund VIG Partners has signed a definitive agreement to acquire a controlling stake in Preedlife Co., Ltd. (Preed), the leading funeral service provider in Korea.
This is the second investment from VIG Fund IV which was closed at $810 million in January. The detailed terms including transaction value are undisclosed.
The deal is expected to close during the third quarter of 2020 after receiving regulatory approvals by the buyout fund.
VIG also owns a controlling stake in Joun Life, one of the leading funeral service providers in Korea, through VIG Fund III.
Upon completion of its acquisition of Preed, VIG plans to consolidate the two companies and that will have a combined customer base of 1.5 million subscribers and cumulative advance payments of KRW 1.2 trillion.
As of 2019, Preed is the first funeral service provider to command an asset value of over KRW 1 trillion. The company currently operates four high-end funeral home franchises across the Seoul metropolitan area under the brand “Shillakwon” which VIG plans to expand nationwide.
“VIG believes, despite its robust profile of over 6 million subscribers and cumulative advance payments of KRW 5.6 trillion, the domestic funeral service industry has been highly fragmented and markedly undervalued,” the company’s statement said.
“Capitalizing on the acquisition of Preed and the eventual merger with Joun Life, VIG plans to further enhance customer perception and public trust towards the pre-paid funeral service business, thereby providing the necessary tailwinds to accelerate an industry-wide growth,” it added.
In January, the Korean private equity firm hit the final close of its fourth country-focused fund at $810 million, marginally exceeding its initial target of $800 million, although a little delayed from its Q3 target close.
Fund IV, which made a first close in May 2019 at $530 million, will seek to acquire control positions in Korean companies with enterprise values ranging from $70 million to $500 million.
Established in 2005, VIG Partners invests in small and medium-sized enterprises across a range of industries such as financial services, consumer goods, online and mobile commerce, and household appliances.
Last October, VIG reached an agreement to pay 165 billion won ($137.6 million) for a controlling stake in blended education service provider D.Share Co Ltd.