VIG to make full exit from Korea's Samyang Optics

LK Partners, a private equity fund affiliated to domestic conglomerate LIG Group, will buy VIG’s remaining 60% stake for KRW102 billion ($88.3 million). The price of KRW17,000 per share represents a premium of 27% to the closing price on the day the agreement was signed.

VIG acquired Samyang for KRW68 billion in 2013. By the time of the company’s KOSDAQ listing – which raised KRW66.8 billion – the private equity firm had already generated a more than 2x return through the proceeds of the offering and dividend recaps. Samyang’s IPO was priced at KRW16,700 and the stock peaked at KRW19,600 in December 2017. It dropped to KRW12,050 in early 2019 but has since recovered. Samyang closed at KRW14,700 on June 27, down 7.55% for the day.

Founded in 1972, Samyang started out producing interchangeable lenses for film cameras and later diversified into manufacturing lenses for CCTV cameras. VIG acquired the business after the owner ran into financial difficulty in his other businesses and needed capital to pay off creditors.

The GP recognized there was an opportunity in refocusing Samyang on interchangeable lenses, capitalizing on how technological improvements were driving demand for DSLR cameras. As a result, it quickly wound down the CCTV lens business and moved into new areas such as auto-focus interchangeable lenses.

In 2014, revenue came to KRW51.6 billion and the split was 49% traditional camera lenses, 37% video lenses, and 9.7% other products, including CCTV. Two years on, the CCTV business had largely disappeared, but revenue had grown to KRW62.7 billion, with traditional camera lenses contributing 60% and video lenses about 40%.

Sales came to KRW60.5 billion in 2018, down from KRW66.3 billion the previous year. Over the same period, net income fell from KRW17.8 billion to KRW12.5 billion.

The acquisition by LK Partners is expected to close in August, delivering a 41.6% gross IRR to VIG. It will bring the distributions to paid-in from the firm’s second fund – which closed at $350 million in late 2013 – to 1.47x. The firm reached a first close of $540 million on its fourth fund earlier this year. The vehicle has a hard cap of $850 million.

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• Topics
• North Asia
• Trade sale
• Open market
• Technology
• South Korea
• VIG Partners
• manufacturing