Headland Capital Partners has acquired a 97 percent stake in YoungToys, a manufacturer and distributor of toys in South Korea, according to a firm statement.
The deal itself was worth 60 billion won (€43 million; $55 million), according to Taigon Kim, senior partner at Headland. No leverage was used in the transaction, he added.
Headland will now get two of the company’s three board seats, and hopes to help the company diversify its product line and expand overseas, particularly to Southeast Asia, Kim said. YoungToys is currently focused on the Korean domestic market.
The investment was made out of Headland Private Equity Fund VI, which is now 60 percent invested, according to senior partner Douglas Ng.
YoungToys is a “pioneer” in the South Korean toy market because it launched its own toy brands backed by an “animation-linked business model”, according to the statement.
Marcus Thomson, chief executive of Headland, explained that YoungToys launched a children's TV show based on its own toy characters that “reinforces the product”.
“Rather than being a foreign-branded toy, this model makes the brand a Korean toy, with Korean cultural attributes,” Thomson said.
The Korean cultural link will be particularly helpful when YoungToys moves to expand abroad, Kim said, because Korean culture is becoming quite popular elsewhere in Asia, including Southeast Asia.
The buyout highlights the trend of family succession-driven deals in Korea, according to Thomson. YoungToys was a private company owned by two founders who are now retiring and selling their stake in the company. Many Korean companies were started in the 70s to 80s, and the time is coming for the founders to retire.
“However, not all of these will be passed down to the children, and [the founders] are averse to selling to competitors,” Thomson said.
Headland has made 18 investments in South Korea since 1998, valued at about $780 million altogether, according to the company statement. The firm, a spinout from HSBC, currently has about $2.4 billion assets under management, according to Private Equity International’s data division, and has two active funds in Asia.