Fund focus: VIG steps up for Fund III

Fundraising for Vogo Investment’s second fund took approximately two years. The Korea-focused private equity firm reached a final close of $350 million in late 2013, having failed to reach the original $650 million target and with only a couple of foreign institutional investors. The country’s National Pension Service (NPS) accounted for about one third of the corpus.

More than three years on, NPS remains a key supporter, but virtually everything else has changed – even the name of the GP. Now known as VIG Partners, the firm announced a final close on its third fund last week at the hard cap of $600 million, exceeding the $500 million target. The process launched in March 2016, a first close of $480 million came that October, and everything apart from the final documentation was wrapped up by the end of December.

NPS has agreed to invest about $215 million in US dollar terms, a sum matched by other domestic institutional LPs. The outstanding $170 million is from overseas LPs, including banks, family offices, insurance companies, fund-of-funds and pension funds from Europe, North America and Asia Pacific.

“It’s our third fund so we have much more of a track record to demonstrate to investors,” says Jason Shin (pictured), managing partner at VIG, when asked why the fundraising process was smoother. “Korean investors knew about our partnership and portfolio companies, so not much marketing was needed. Foreign investors were less familiar with us but following the maturing of Fund II we have been able to present evidence of acquiring blue chip companies, managing them well, and exiting successfully.”

All five companies in VIG’s debut fund, which closed at $573 million in 2005, have been exited. While semiconductor manufacturer Siltron proved problematic – a minority investment in a cyclical business – the likes of Novita and BC Card delivered returns of 2.2x or higher. Tong Yang Life Insurance generated a 1.8x multiple for Fund I, but VIG raised a supplementary vehicle when it went from a minority to a majority position in 2010. The asset was exited to Anbang Insurance in 2015 in a KRW1.13 trillion ($991 million) deal.

There has been one full exit from Fund II, with the sale of the Burger King master franchise for Korea to Affinity Equity Partners. The multiple was approximately 2.5x. In addition, VIG used a dividend recap to return more than its entire equity commitment to Samyang Optics, a camera lens manufacturer bought for an enterprise valuation of KRW68 billion in 2013.

Of the seven portfolio companies in Fund II, three – Samyang, Burger King and parking management business HiParking – were carve-outs from Korea conglomerates. The rest were family-owned, part of a broad swath of Korean businesses that were set up in the 1980s and whose founders are now reaching retirement age but don’t necessarily have succession plans in place.

Fund III is expected to see more of the same. “We will replicate the Fund II strategy, philosophy and types of investment,” Shin explains. “This means targeting mid-market companies on a control basis, primarily in the domestic consumption space.”

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North Asia
• Fundraising
• Buyout
• GPs
• Consumer
• South Korea
• VIG Partners