Korean buyout shop VIG ponders dedicated growth capital team

VIG Fund IV is 69% invested and expected to complete one more deal this year, managing partner Chulmin Lee tells PEI.

VIG Partners, a Korean buyout firm, will consider pushing deeper into growth capital investing after signing its first such deal for more than half a decade.

The Seoul-headquartered firm acquired a 7.5 percent stake in logistics business Fassto last month for $25 million, managing partner Chulmin Lee told Private Equity International. VIG had not completed a growth investment since the formation of its 2016-vintage Fund III.

“There’s not many growth funds in Korea that can invest $30 million to $50 million each time, except for a few international GPs or domestic investment banks,” Lee said.

“Thus, we may further consider growth capital investment opportunities in our next fund and, in future, we may consider launching a dedicated growth capital team, because we’re coming across many attractive growth capital opportunities.”

Fassto was acquired by Fund IV, which closed in December 2019 above its 850 billion won ($675 million; €637 million) target and below its 1 trillion won hard-cap, PEI reported at the time. That fund is 69 percent invested and expected to complete one more deal this year, Lee said. The portfolio includes drinks company Teazen, which it also acquired last month, and personal care company Kundal.

Korean deal value doubled last year to a record $30 billion, according to Bain & Co’s Asia-Pacific Private Equity Report 2022. Growth equity deals accounted for 55 percent of invested capital, versus 34 percent for buyouts. Exits climbed 82 percent to $21 billion, driven by IPOs and trade sales.

Growth capital deal value globally hit a record $121.5 billion last year across 1,454 transactions, according to Pitchbook. About $36 billion went to technology companies in 2021, up 52 percent from the previous year.

Growth equity hit an all-time fundraising high last year at $144.3 billion, according to PEI data. EQT, Carlyle Group, Blackstone and Brookfield Asset Management are among those that have launched dedicated growth equity funds in recent years.

Such vehicles fill a gap in the market for companies that are not yet ready for an initial public offering, but are too mature for venture capital, Jean-François Le Ruyet, a partner at Paris-based fund of funds Quilvest Capital Partners, told PEI last year.

“Investors are attracted to growth funds because they usually clean the cap table,” he said. “[This enables] a lot of venture firms and investors from different rounds to exit, resulting in an easier-to-understand shareholding structure.”