Unitas in timely bet on Korea's outdoor market

"The owner wanted to make NEPA a global brand and was actually talking to some Korean PE funds, but he realized that they weren't able to help him become a global player," a source close to the deal tells AVCJ. "He was also thinking about approaching some foreign funds, but was skeptical, because a lot of these funds don't have a lot of experience in Korea."

Then Unitas came on the scene. Impressed with the firm's track record in Korea and its experience of taking companies global, NEPA CEO Hyung Seob Kim gave Unitas partner and COO Eugene Suh - who led the deal - exclusivity after several meetings. A deal was signed within six months.

As part of the agreement, Unitas established a newco - Amsterdam-based Asia Mountaineering Holdings - and pledged to invest KRW190 billion ($162.4 million) in Seoul-based NEPA in return for a significant minority stake in the new entity. It is a horizontal spin-out, so shareholders in the parent firm will also be shareholders of the spun-out NEPA, in which H.S. Kim holds a majority stake.

The attraction for Unitas was the chance to participate in the fast-growing outdoor apparel market - itself the most rapidly-expanding segment of the apparel sector globally. "The outdoor apparel companies in Korea have the best performance technology," says AVCJ's source. NEPA claims to be the fastest-growing outdoor player in Korea and successfully convinced Unitas of the superiority of its design, performance and technological capabilities.

Korea is currently the world's second fastest-growing market for outdoor clothing and equipment, and recent changes to the working week might offer some explanation as to why. The government introduced mandatory 40-hour, five-day weeks in 2011 for all workers, and school weeks have also been reduced from six to five days as of this year. As a result, Koreans are benefitting from additional leisure time, which many are devoting to activities such as hiking and mountaineering. Furthermore, winters in the country are often very cold, creating demand for apparel that offers moisture management and temperature control technology.

An active player in a Korean outdoor industry that is growing at 19.1% a year, NEPA's next stop is global expansion. This will take the form of both organic growth and overseas M&A, with prominence in China - whose outdoor market is growing at more than 50% per annum - a particular ambition. Later down the line, Unitas may also assist the firm in extending its footprint into Europe.

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• Topics
• North Asia
• Buyouts
• Consumer
• Unitas Capital
• South Korea
• Consumer
• buyout