Korea's Hahn & Co targets $3.25b for Fund IV
Hahn & Company has set a target of USD 3.25bn for its fourth Korea-focused fund, which will include a co-investment sidecar of unspecified size.
The target was first reported by Mergermarket, AVCJ's sister publication, and has since been confirmed to AVCJ by two sources close to the situation. Hahn & Co has opened the data room to make LPs more familiar with its track record and operations. A private placement memorandum is set to be issued before the end of the year, one source added.
Fund IV will be structured much like its predecessor. There is a pool of core equity plus a co-investment sidecar – or supplemental – that allows Hahn & Co to flex up for larger deals. The same LPs feature in both vehicles on a pro rata basis. The size of the sidecar will be decided once the fundraise formally launches and there is a clearer idea regarding LP demand, the same source said.
The sidecar comprises committed capital. In addition, Hahn & Co raises separate co-investment vehicles for specific transactions. The capital is uncommitted: select LPs are invited to participate as and when opportunities arise, on different terms to the main fund and sidecar.
When the firm raised USD 1.2bn for its second fund in 2014, it also accumulated USD 700m in co-investment to support the acquisition of auto parts supplier Hanon Systems.
Fund III closed on USD 3.2bn in 2019. This included USD 2.7bn in core equity, a sidecar, and a USD 500m co-investment fund. The co-investment fund increased in size as larger deals closed. It is now around the USD 1bn mark, taking the overall capital committed in the Fund III cycle – in fund investment and co-investment – to nearly USD 4bn.
Hahn & Co's deal flow continues to span the upper mid-cap to large-cap spaces. In the past 24 months, the firm has acquired the biofuels division of SK Chemicals for KRW 382.5bn (USD 322m), bought Korea Air's in-flight catering and duty-free operations for KRW 900.6bn, and announced the purchase of a majority stake in Namyang Dairy Products for KRW 310.7bn. The latter deal has yet to close.
Most recently, the firm agreed to acquire 100% of SK Group's polyester film business for KRW 1.6trn.
Hahn & Co is also raising a single asset continuation vehicle for Ssangyong Cement. It bought the business out of bankruptcy through Fund II and combined it with several smaller cement producing assets from Fund I.
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