Korea's VIG seeks $1.1b for Fund V
South Korean mid-market private equity firm VIG Partners has launched its fifth fund with a target of USD 1.1bn, seeking to replicate the even split between domestic and foreign capital achieved in the previous vintage.
The fund comprises onshore and offshore vehicles that invest in parallel. Fundraising efforts for the onshore vehicle have already begun and the offshore process will start early next year, according to a source close to the situation. VIG declined to comment on fundraising.
Korea’s National Pension Service (NPS) is a longstanding LP on the domestic side, but VIG did not feature when NPS announced its 2023 allocations for domestic private equity managers. Macquarie, IMM Private Equity, and Hahn & Company were selected. VIG is targeting inclusion in the 2024 allocation.
The firm also considered launching a continuation fund in conjunction with Fund V, but it pulled out in response to TPG Capital agreeing to acquire Australian funeral services provider Invocare in August for a higher valuation multiple than expected. Preed Life, Korea’s leading comparable business, is VIG’s largest portfolio company and was slated for inclusion in the secondary. It is now being sold separately.
Preed Life is the product of an ambitious consolidation play that saw VIG buy Joun, the eighth largest player, through Fund III in 2016 and then Preed, the industry leader, via Fund IV in 2020. There have been several other smaller bolt-on acquisitions. The firm has more than recouped its original investment in Joun following a refinancing and a partial exit.
Other Fund IV portfolio companies include airline Eaststar Jet, beverage brand Teazen, waste-to-energy (WTE) facility operator BioEnergyFarmAsan, English language education provider D.Share, and The Skin Factory, operator of domestic home and personal care products brand Kundal.
Fund IV closed on USD 810m in early 2020, beating a target of USD 800m. In addition to the local financial institutions that have backed VIG since its inception, the firm received support from overseas LPs including fund-of-funds, US and European insurers, and North American pension funds.
The firm formally targeted offshore LPs for the first time in Fund III, which closed on USD 600m in 2017. International investors accounted for 30% of the corpus, rising to 50% in Fund IV.
VIG’s strategy remains control investments in mid-market companies with enterprise valuations of USD 70m-USD 500m, primarily in the domestic consumption space. Founder succession situations and corporate carve-outs are the most common origination scenarios.
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