Carlyle exits Korean garment manufacturer
The Carlyle Group has agreed to sell its majority stake in Korean apparel manufacturer Yakjin Trading Corporation to domestic fashion giant JS Corporation for around KRW14.3 billion ($12 million).
The private equity firm acquired a 70% stake in Yakjin seven years ago at a valuation of approximately KRW200 billion. Carlyle committed capital from its 2008 vintage Asia growth fund, which closed at $1 billion. The deal was positioned as a partnership with Yong-Ro Cho, Yakjin’s CEO, who retained a 30% interest. Both are now selling to JS Corp, according to a filing.
Established in 1978, Yakjin is a leading original equipment manufacturer (OEM) for GAP, Banana Republic, Old Navy, American Eagle, Walmart, Victoria’s Secret, Superdry, and Shinsegae International. The company has plants in Vietnam, Cambodia, and Indonesia, and it is developing a presence in Central America. A factory opened in Haiti two years ago.
At the time of Carlyle’s investment, Yakjin was expanding its in-house fabric production capacity and strengthening its design team to offer increasingly differentiated products. The primary in-house fabric knitting, dyeing and finishing facility – known as Intertex – is based in Vietnam.
The company generated revenue of KRW555.9 billion in 2019, down from KRW570.6 billion a year earlier. Over the same period, it moved from a net loss of KRW13.6 billion to a net profit of KRW1 billion.
JS Corp, which posted revenue and net profit of KRW253.1 billion and KRW8.2 billion in 2019, is best known as a handbag OEM, supplying the likes of Burberry, Kate Spade, Michael Kors, Ralph Lauren, and Guess. Most of its manufacturing capacity is in China, though there are also facilities in Vietnam and Indonesia.
Carlyle is currently deploying the successor to the 2008 Asia growth fund. The vehicle had $300 million in capital as of April. The firm’s recent activity in Korea has been through its Asia buyout strategy, notably a KRW240 billion investment in KB Financial Group in June. Last year, the firm appointed John Kim, previously of Goldman Sachs, as a managing director in its Asia buyout team and head of all investment activity in Korea.
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