South Korean buyout firm VIG Partners, which agreed to fully exit from the contact lens maker Star Vision last week, plans to completely divest its stake in 1-2 more portfolio companies from its third fund, an executive of the firm told DealStreetAsia.
VIG Partners also plans to focus on exits from the remaining portfolio companies of VIG Fund III — a Korea-focused vehicle that closed at $600 million in 2017 after a year of being established.
“In addition to the full exits, we are targeting partial exits via dividend recap for two other portfolio companies,” said Chulmin Lee, VIG’s managing partner.
VIG Fund III, which counts Korea’s National Pension Service (NPS) among its limited partners (LPs), has seven companies in its portfolio — funeral services provider Preedlife; used car dealer AutoPlus; skincare producer PNC Labs; athletic fabric manufacturer YouYoung; cold chain logistics company Foodist; Korean fried chicken franchise Bonchon; and Starvision.
To date, VIG Partners has had three partial exits from Fund III — the sale of a 10% stake and refinancing of Preedlife; the recapitalisation of Bonchon; and the sale of its stake in Foodist.
The agreement to sell its 51.03% stake in Starvision to the company’s founder and current minority shareholder Sang Jin Park marked its first full exit from Fund III. The transaction value was not disclosed. But VIG said, if the deal closes by end-April, it will generate approximately 2x return on its investment.
VIG first invested in Starvision in July 2018.
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.
Since its inception, it has invested in at least 21 portfolio companies through its three vehicles and now manages over $3 billion in assets.
In late 2019, VIG Partners closed its fourth fund at $850 million. Fund IV has made four buyout investments and has deployed roughly 50% of its capital, according to Lee.
“These investments have deal values ranging from $150-250 million, which we consider our sweet spot for mid-market buyout transactions, and the businesses range from home personal care to waste-to-energy recycling industries,” he added.
He also said the firm plans to invest in 2-3 additional companies in 2022 through Fund IV.
South Korean startups are attracting record levels of cash from private investors, leading to the number of “unicorns” in the country doubling over the past three years and setting the stage for more blockbuster stock listings like Coupang Inc.
Lee said that VIG will opportunistically look into growth capital stage companies that the firm believes has a “disruptive” impact on sectors where it has focused buyout activities — consumer, retail, finance, healthcare, and media, among others.
VIG is unlikely to invest in high-tech sectors such as blockchain, cryptocurrency, or AI companies. It may also avoid early-stage ventures.